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Dollar Loses Ground Against Major Currencies

Dollar Loses Ground Against Major Currencies

The U.S. dollar exhibited weakness against most major currencies on Friday after the Federal Reserve Chairman Jerome Powell reiterated that the central bank will “act appropriate” to support economic expansion.

The dollar index declined to a low of 97.59 a little past mid afternoon and was last seen hovering around 97.70, down nearly 0.5% from previous close.

Against the euro, the dollar was down 0.5% at 1.1140, off the session’s low of 1.1155.

The Pound Sterling was up 0.18% at $1.2275, and against the Yen, it was down nearly 1% at 105.44.

Against the loonie, the dollar was down marginally at 1.3297. Against the Aussie, it shed about 0.12% at 0.6749.

The greenback’s decline against Swiss franc was significantly pronounced with the pair trading at 0.9752, down as much as 0.85% from previous close.

U.S. President Donald Trump’s tweet, criticizing the Fed and its Chief Powell raised fears the government could intervene in currency markets.

During his speech at the Jackson Hole Economic Policy Symposium today, Powell said the bank will “act as appropriate” to sustain the U.S. economic expansion.

Powell described the three weeks since the Fed decided to lower interest rates by 25 basis points at its July meeting as “eventful.”

The Fed Chief cited President Donald Trump’s announcement of new tariffs on Chinese imports as well as further signs of a global economic slowdown, notably in Germany and China.

Powell also pointed to several geopolitical events, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government.

As a result of the subsequent uncertainty, Powell said the Fed is “carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy.”

Trump, seemingly unimpressed by Powell’s remarks, tweeted whether the “biggest enemy” of America was Powell or Chinese President Xi Jinping.

“As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly,” Trump tweeted.

He added, “We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great.”

Meanwhile, data released by the Commerce Department Friday said new home sales plunged by 12.8% to an annual rate of 635,000 in July after soaring by 20.9% to a sharply upwardly revised rate of 728,000 in June.

Economists had expected new home sales to come in virtually unchanged from the 646,000 originally reported for the previous month.

The material has been provided by InstaForex Company – www.instaforex.com