PT Solid Gold Berjangka | Dollar Dips on Dovish Powell Comments

02:01 20 October in Commodity, PT SGB, SOLID GOLD BERJANGKA | SOLID GROUP

The dollar dropped on Thursday after Federal Reserve Chair Jerome Powell was interpreted as being generally dovish in comments made at an economic forum, even as he warned that the U.S. central bank could raise interest rates again.

The U.S. economy’s strength and continued tight labor markets could warrant further rate increases, Powell said. But he also noted that recent market-driven increases in bond yields have helped to “significantly” tighten overall financial conditions.

Several Fed officials in recent weeks have noted the impact of rising Treasury yields. The benchmark 10-year yield reached a 16-year high of 4.996% on Thursday.

Markets expect the Fed to hold rates at current levels for the foreseeable future, but are pricing in some probability of an additional increase.

Fed funds futures imply a 30% probability the Fed will raise rates in December, down from 39% before Powell’s comments, and no chance of a hike in November, according to the CME Group’s FedWatch Tool.

The dollar index was last down 0.27% on the day at 106.24. The euro gained 0.42% to $1.0581.

The rally in the greenback has largely stalled and the currency has consolidated since the index hit a 10-month high on Oct. 3.

The rally in the greenback is also seen as stretched, with the index having risen by 6.7% since mid-July and many investors already holding the currency.

Concerns over the conflict between Hamas and Israel remain a factor that may increase safe haven demand for the U.S. currency.

The Japanese yen gained slightly on the day but remained near the 150 level against the U.S. dollar, where traders see a risk that Japanese officials could intervene to shore up the currency. It was last at 149.85.