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Forex News: Dollar Drops Before Powell's Testimony

Dollar Drops Before Powell's Testimony

02/11/2020 - 08:34:00 (RTTNews)

(RTTNews) - The U.S. dollar was lower against its most major opponents during the European session on Tuesday, as investors awaited testimony from Federal Reserve Chairman Jerome Powell to see whether he would downplay the risks posed by the coronavirus.

Powell will testify before the House at 10:00 am ET.

The Chairman is expected to sound fairly upbeat about the outlook for U.S. economic growth and will face pointed questions from lawmakers related to the impact of the spreading coronavirus.

The Fed had adopted a 'wait-and-see' attitude, after reducing interest rates three times in 2019.

Powell will face the Senate Banking Committee on Wednesday.

Fed Vice Chair Randal Quarles, Minneapolis Fed President Neel Kashkari and Federal Reserve Bank of St. Louis President James Bullard are scheduled to speak at separate events later in the day.

The dollar was also weighed by improving risk sentiment, as the new coronavirus cases slowed in China.

In remarks on state television, Xi Jinping vowed to win the fight against the coronavirus outbreak.

Jinping said that China will speed up the development of drugs aimed at treating the deadly pneumonia-like virus.

The greenback dropped to 1.2943 versus the pound, following a gain to 1.2894 at 3:15 am ET. The next possible support for the greenback is seen around the 1.32 level.

Data from the Office for National Statistics showed that the UK economy logged flat growth in the fourth quarter.

Gross domestic product remained unchanged on quarter, as expected, after expanding 0.5 percent in the third quarter.

The greenback pulled back to 1.0921 against the euro, from a rally to 1.0906 at 2:15 am ET, which was its strongest since October 2. On the downside, 1.12 is possibly seen as the next support level for the greenback.

After rising to a 1-1/2-month high of 0.9788 versus the franc in the Asian session, the greenback retreated to 0.9765. The greenback is seen locating support around the 0.96 level.

The greenback eased off to 109.82 against the yen, from a 4-day high of 109.95 at 3:00 am ET. If the greenback slides further, 108.00 is likely seen as its next support level.

The greenback edged down to 1.3288 against the loonie, from yesterday's closing value of 1.3317. Further downtrend may take the greenback to a support around the 1.30 region.

In contrast, the greenback recovered to 0.6703 against the aussie, from an early 4-day low of 0.6719. The greenback is poised to challenge resistance around the 0.625 mark.

Data from the Australian Bureau of Statistics showed that Australia's home loans rose in December.

The new loan commitments for housing rose a seasonally adjusted 4.4 percent month-on-month in December. On an annual basis, loans increased 14.0 percent.

The greenback held steady against the kiwi, after falling from a 3-month high of 0.6378 hit in the Asian session. At yesterday's trading close, the pair was valued at 0.6384.

Looking ahead, European Central Bank President Christine Lagarde will deliver a speech before the European Parliament in Strasbourg at 9:00 am ET.

Federal Reserve Chair Jerome Powell testifies on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC at 10:00 am ET.

At 10:35 am ET, Bank of England Governor Mark Carney will testify before the House of Lords Economic Affairs Committee in London.

Federal Reserve Governor Randal Quarles will give a speech about bank supervision at the Yale Law School Dean's Lecture in Connecticut at 12:15 pm ET.

For comments and feedback: contact editorial@rttnews.com

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