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Forex News: U.S. Dollar Slides On Hopes Of Fed Rate

U.S. Dollar Slides On Hopes Of Fed Rate Hike Pause

01/07/2019 - 06:33:00 (RTTNews)

(RTTNews) - The U.S. dollar declined against its major counterparts in the European session on Friday, weighed by growing hopes that the Federal Reserve would hold off further rate hikes this year.

The sell-off in dollar came after comments from Federal Reserve Chairman Jerome Powell, who said the central bank "will be patient" with monetary policy as it watches the economy evolve.

"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said Friday.

Powell also said Fed is "always prepared to shift the stance of policy".

"We said we'd be prepared to adjust" the plan "as appropriate to achieve our" objectives of solid economic growth and stable inflation, Powell said. "We wouldn't hesitate to change it," he added.

Fed funds futures are expecting almost no chance of rate hike in first half of 2019 and almost a 25 percent possibility for a rate cut by December.

The currency has been trading in a negative territory against its major counterparts in the Asian session.

The greenback dropped to a 5-day low of 0.9819 against the franc, from a high of 0.9877 hit at 5:00 pm ET. The greenback is likely to find support around the 0.97 level.

Having advanced to a 4-day high of 108.62 against the yen at 6:15 pm ET, the greenback reversed direction and eased off to 108.02. The next possible support for the greenback is seen around the 106.00 level.

Data from the Bank of Japan showed that Japan monetary base rose 4.8 percent on year in December, coming in at 504.2 trillion yen.

That was well shy of forecasts for 5.8 percent and down sharply from 6.1 percent in November.

The greenback fell to a 5-day low of 1.1448 against the euro, reversing from a high of 1.1395 touched at 5:00 pm ET. If the greenback drops further, it may find support around the 1.16 level.

Data from Destatis showed that Germany's retail sales grew at the fastest pace in seven months in November, exceeding economists' expectations.

Retail sales rose a calendar and seasonally adjusted 1.4 percent from October, when they edged up 0.1 percent, revised from a 0.3 percent fall.

Pulling away from a high of 1.2716 hit at 5:30 pm ET, the greenback changed direction and weakened to a 5-day low of 1.2765 versus the pound. The greenback is seen finding support around the 1.29 region.

The greenback slipped to near a 4-week low of 1.3344 against the loonie, near 3-week lows of 0.7142 against the aussie and 0.6764 against the kiwi, from its early highs of 1.3389, 0.6726 and 0.7109, respectively. On the downside, 1.32, 0.73 and 0.69 are likely seen as the next support levels for the greenback against the loonie, the aussie and the kiwi, respectively.

Looking ahead, Canada Ivey PMI and U.S. ISM services PMI for December are scheduled for release in the New York session.

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