Dollar Drops Before Powell's Testimony
February 11 2020 - 2:34AM
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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.
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