The U.S. dollar drifted lower against its major rivals on Friday after the Federal Reserve Chairman Jerome Powell indicated that interest rate hikes are unlikely anytime soon.
During his much anticipated speech at the Federal Reserve’s annual Jackson Hole symposium this morning, Jerome Powell said the central bank is likely to begin tapering some of its easy-money policies before the end of the year. However, he added that he still feels there’s “much ground to cover” before rate hikes.
Powell said the economy has reached a point where it no longer needs as much policy support, indicating the Fed might start reducing the amount of bonds it purchases each month before the end of 2021, provided the economy continues to progress.
The Fed will be carefully assessing incoming data and the evolving risks from the virus crisis while pulling back stimulus measures, Powell noted.
He added that while inflation is solidly around the Fed’s 2% target rate, “we have much ground to cover to reach maximum employment,” which is the second prong of the central bank’s dual mandate and necessary before rate hikes happen.
Powell said some of the factors that pushed inflation higher are starting to abate. “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,” he said.
In economic releases today, data showed personal income in the U.S. increased by 1.1 percent in July, after a revised 0.2 percent advance in June. Meanwhile, personal spending rose by 0.3 percent in July, after rising by an upwardly revised 1.1 percent in June.
Wholesale inventories in the U.S. increased by 0.6 percent month-over-month to $722 billion in July, cooling from an upwardly revised 1.2 percent rise in June, according to a preliminary estimate.
The personal consumption expenditure price index in the U.S.rose 0.4 perent in July, following a 0.5 percent increase a month earlier.
The University of Michigan’s consumer sentiment for the US was revised to 70.3 in August, from a preliminary reading of 70.2.
The dollar index, which slid to 92.63, was last seen at 92.68, down 0.4% from the previous close.
Against the Euro, the dollar weakened to $1.1795 from $1.1753.
The Pound Sterling firmed against the dollar, fetching $1.3761 a unit, compared to $1.3699 Thursday evening.
Against the yen, the dollar weakened, fetching 109.82 yen after having settled at 110.09 on the previous session.
Against the Aussie, the dollar eased to 0.7312 from 0.7237.
The Swiss franc strengthened to 0.9110 a dollar from 0.9178. The Loonie advanced to C$ 1.2618 a dollar from C$ 1.2688 as oil prices rose sharply amid prospects of disruptions in crude production in the Gulf of Mexico region due to the impact of Hurricane Ida.