U.S. Dollar Advances After Powell’s Speech

4

The U.S. dollar increased in late trading on Friday, after Federal Reserve Chair Jerome Powell signalled that the central bank may need to raise interest rates further to ensure inflation is contained.

The dollar index, which measures the greenback against six major peers, was up 0.09 percent to 104.0776 after Powell’s remarks.

“Although inflation has moved down from its peak … it remains too high,” Powell said Friday at an annual economic symposium in Jackson Hole, Wyoming. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

Experts have their own interpretations of Powell’s speech.

In June, the Fed temporarily halted its battle against inflation due to concerns over the impact of banking stresses on lending. There is a possibility that the central bank might opt to pause once more in September, as it awaits additional data amid uncertainties.

“We think that the Fed is more likely to take a wait-and-see approach with the data and try to understand a little bit more about why the labor market is remaining so strong, despite the inflationary experience that we’ve had and the higher interest rates in the economy,” said Sinead Colton Grant, head of BNY Mellon investor solutions.

After Powell’s speech, stocks bounced between gains and losses before moving more firmly into positive territory. The U.S. two-year Treasury yields rose 3.8 basis points to 5.054 percent, while 10-year yields were little changed at 4.239 percent.

In late New York trading, the euro was down to 1.0808 U.S. dollars from 1.0809 dollars in the previous session, and the British pound was down to 1.2596 U.S. dollars from 1.2607 dollars.

The U.S. dollar bought 146.3690 Japanese yen, higher than 145.8610 Japanese yen of the previous session. The U.S. dollar fell to 0.8838 Swiss francs from 0.8845 Swiss francs, and it increased to 1.3591 Canadian dollars from 1.3575 Canadian dollars. The U.S. dollar increased to 11.0306 Swedish krona from 10.9889 Swedish krona.