Forex - U.S. Dollar Slumps as Powell Pushes for Gradual Rate Hikes By Investing.com

Forex - U.S. Dollar Slumps as Powell Pushes for Gradual Rate Hikes

Forex Aug 24, 2018 10:26AM ET

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Forex - U.S. Dollar Slumps as Powell Pushes for Gradual Rate Hikes

Investing.com - The U.S. dollar was lower against other currencies on Friday after Federal Reserve Chairman Jerome Powell emphasized the need for gradual rate hikes.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, decreased 0.51% to 95.06 as of 10:25 AM ET (14:25 GMT).

In a speech at the Jackson Hole Economic Symposium on Friday, Powell cautioned against hiking interest rates too quickly.

“I see the current path of gradually raising interest rates as the FOMC's approach to taking seriously both of these risks,” he stated.

The Fed kept rates unchanged at its last meeting in August but is expected to increase rates at least two times before the end of the year.

The greenback was also held back by news that the U.S. and China went ahead with 25% tariffs on $16 billion worth of each other's goods, as trade talks between the two ended with no agreement. The two biggest economies in the world have been in a tit-for-tat trade war for months.

The dollar was lower against the safe-haven yen, with USD/JPY decreasing 0.09% to 111.19. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.

The lower greenback pushed the euro higher, with EUR/USD rising 0.76% to 1.1627. Sterling also gained ground, with GBP/USD up 0.40% to 1.2864.

The Turkish lira rose against the greenback, with USD/TRY falling 1.12% to 6.0228 in thin trading, as Turkish financial markets are closed for holidays for the week. The lira has been under pressure over the last few weeks as the U.S. and Turkey disagree over a detained American pastor.

Meanwhile the Australian dollar was up, with AUD/USD rising 1.26% to 0.7339, while NZD/USD was up 0.69% to 0.6687. The loonie was higher against the greenback, with USD/CAD falling 0.39% to 1.3030.

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