Greenback is suppressed by dovish Powell

Greenback is suppressed by dovish Powell

On Wednesday, the greenback declined versus its counterparts because Fed Chairman Jerome Powell told that interest rates were below neutral, thus affecting the optimism for a more hawkish rate-lift cycle.

The USD index, evaluating the purchasing power of the American dollar against its primary counterparts headed south by 0.31% ending up with 96.99.

Powell told that by historical standards interest rates still appear to be low, and they are still below the wide array of forecasts of the level, which would be neutral for the American economy, neither accelerating nor speeding down surge.

With interest rates in a band of 2%-2.25% and the array of forecasts for the neutral rate 2.5%-3.5%, RBC told that Powell's statement was more factual dovish, hinting that the market reaction was overdone.

Ahead of the speech, traders were geared up towards getting sense of whether Powell would soften his tone on policy tightening against the backdrop of everlasting criticism from US leader.

Donald Trump told that he was dissatisfied with his selection of Powell as the key bank governor, stressing that the Federal Reserve was off-base with its stance on rate lifts.

Market participants will look to the Fed minutes from its November gathering slated for Thursday for further prompts on whether the key bank has stuck with a more dovish stance on policy.

The dive in the evergreen buck drove a leap in both the common currency and pound.

The currency pair GBP/USD went up by nearly 0.53% being worth $1.2814 even as BoE governor Mark Carney told that a chaotic departure from the European bloc would push the British economy into a far worse recession than that faced after the global financial meltdown of 2008.

The currency pair EUR/USD rallied by 0.69% being worth $1.366. The currency pair USD/JPY slumped by 0.22% hitting Y113.53.

The currency pair USD/CAD lost 0.19% trading at C$1.3169.

 

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