The US dollar on Friday fell for the sixth time in seven days as US Fed Chairman Jerome Powell said that gradual rate increases are likely appropriate if growth stays strong and that “there does not seem to be an elevated risk of overheating.”
The 10-year Treasury yield edged lower to 2.82 percent.
“It looks like he understands the light touch he has to have on raising rates versus inflation,” Kim Forrest, senior portfolio manager at Fort Pitt Capital Group LLC in Pittsburgh, said by telephone.
“It doesn’t sound like he’s going to do a [former Fed chairman Alan] Greenspan, over-tighten. But he does understand inflation is now probably his primary objective, keeping that measure as the primary issue in the economy. But you also don’t want to kill the recovery and kill strong growth. He’s going to let the data decide,” Forrest said.
Investors hoping for a global trade resolution were left disappointed after the US talks with China ended with an increased likelihood that tit-for-tat tariffs will escalate, casting a shadow over the global-growth outlook.
However, the focus has shifted back to Fed policy, with bond traders more certain of two rate hikes by the end of this year.
However, this view could be tested with the turmoil in emerging markets, continuing trade tensions and political drama in Washington still hanging in the background.
The US dollar index, which measures the greenback against six rival currencies, on Friday fell 0.5 percent to 95.17, down 1 percent for the week from last week’s 96.10.
In Taipei, the New Taiwan dollar rose against the greenback, gaining NT$0.070 to close at NT$30.783, little changed from last week’s NT$30.802.
The Mexican peso on Friday pared gains against the greenback as cracks emerged in North Atlantic Free Trade Agreement negotiations.
The euro gained 0.7 percent against the US dollar to US$1.1625, up 1.6 percent for the week.
The Japanese yen rose 0.1 percent to ￥111.19 per US dollar, but was down 0.7 percent for the week.
Against a broadly weaker US dollar, the British pound found some buyers and rose to as high as US$1.2861, rising 0.3 percent on the day and 0.9 percent for the week.
Additional reporting by CNA and Reuters, with staff writer
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