The U.S. dollar slipped against its major trading partners in the New York session on Friday, after Federal Reserve chair Jerome Powell signaled a gradual reduction in bond purchases as the spread of the Delta variant poses near term risk to the economic outlook.
The economy has made substantial progress towards the Fed’s goals to start reducing the pace of asset purchases this year, Powell said in a virtual speech at Jackson Hole Economic Symposium.
“Inflation at these levels is, of course, a cause for concern. But that concern is tempered by a number of factors that suggest that these elevated readings are likely to prove temporary.”
The Fed will be carefully assessing incoming data and the evolving risks from the virus crisis while pulling back stimulus measures, Powell noted.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell added.
Data from the Commerce Department showed that U.S. personal income rose more than expected in July.
The report showed personal income grew by 1.1 percent in July, after a revised 0.2 percent advance in June. Economists had expected a rise of 0.2 percent.
Personal spending rose by 0.3 percent in July, after rising by an upwardly revised 1.1 percent in June.
The greenback was higher in the European session, as Cleveland Federal Reserve President Loretta Mester remarked that the tapering of the asset purchase program should begin some time this year.
The greenback weakened to 0.9131 against the franc, after an 8-day rise to 0.9200 at 9:15 am ET. At yesterday’s trading close, the pair was quoted at 0.9176. Further fall in the currency may challenge support around the 0.88 level.
The greenback dropped to its lowest level since August 13 against the euro, at 1.1802. This followed a 2-day high of 1.1735 seen at 9:10 am ET. The pair was worth 1.1752 when it closed deals on Thursday. Immediate support for the greenback is likely seen around the 1.20 level.
Preliminary data from Destatis showed that Germany’s import price inflation accelerated in July to its highest level in four decades.
The import price index climbed 15.0 percent year-on-year after a 12.9 percent increase in July. Economists had forecast a rise of 13.6 percent.
The greenback slipped to a 9-day low of 1.3781 against the pound, after touching a 4-day high of 1.3680 at 8:45 pm ET. The pound-greenback pair had ended yesterday’s trading session at 1.3699. Should the greenback falls further, it is likely to test support around the 1.40 region.
The greenback pulled back from a 2-week high of 110.27 against the yen, with the pair trading at a 2-day low of 109.86. The pair had closed Thursday’s deals at 110.08. The greenback may locate support around the 104.00 level.
The greenback depreciated to a 10-day low of 0.7307 against the aussie, following a 3-day rise to 0.7222 at 8:30 pm ET. The greenback was worth 0.7236 per aussie at Thursday’s New York session close. Extension of downward trading may see the greenback finding support around the 0.76 region.
Data from the Australian Bureau of Statistics showed that Australia’s retail sales declined for a second straight month in July.
Retail sales fell a seasonally adjusted 2.7 percent from June, when they dropped 1.8 percent. Economists had forecast a 2.3 percent slump.
The greenback reached a 10-day low of 0.7008 against the kiwi, down from a 2-day high of 0.6933 set at 8:15 pm ET. At Thursday’s close, the pair was valued at 0.6943. Next key support for the greenback is likely seen around the 0.72 level.
Having advanced to a 4-day high of 1.2708 at 8:30 pm ET, the greenback edged down to 1.2611 against the loonie. The greenback was trading at 1.2685 against the loonie at yesterday’s close. The greenback is seen locating support around the 1.22 level.
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