U.S. Dollar Higher As Powell Dismisses Negative Rate Idea

By | May 14, 2020
InstaForex
U.S

The U.S. dollar turned higher against its major trading partners in the European session on Thursday, as Fed Chair Jerome Powell rejected the likelihood of negative rates to counter unprecedented downturn caused by the COVID-19 pandemic.

Powell joined a list of policymakers on Wednesday to dismiss negative rate policy, even as financial markets are pricing a chance within the next year.

“The committee’s view on negative rates really has not changed. This is not something we’re looking at,” Powell said in a speech at the Peterson Institute for International Economics.

The Fed Chair warned of a prolonged recession from the viral outbreak, significantly worse than any recession since World War II.

The path ahead is both highly uncertain and subject to significant downside risks, he added.

The U.S. Labor Department releases its weekly jobless claims data at 8:30 am ET. Economists expect the jobless claims to rise by 2.5 million in the week ended May 9, compared to an increase of 3.17 million in the previous week.

The greenback appreciated to 2-day highs of 1.0789 against the euro and 0.9745 against the franc, from its early lows of 1.0824 and 0.9717, respectively. On the upside, 1.04 and 1.00 are possibly seen as the next resistance levels for the greenback against the euro and the franc, respectively.

The greenback firmed to a 3-week high of 0.5968 against the kiwi, 1-week highs of 0.6420 against the aussie and 1.4116 against the loonie, off its early lows of 0.6005, 0.6469 and 1.4068, respectively. The greenback is likely to find resistance around 0.55 against the kiwi, 0.60 against the aussie and 1.45 against the loonie.

The greenback spiked up to more than a 5-week high of 1.2181 against the pound, after falling to 1.2242 in previous deals. Next key resistance for the greenback is seen around the 1.19 region.

The greenback recovered to 107.02 against the yen, from a low of 106.78 set at 2:00 am ET. The greenback is poised to find resistance around the 110.00 level.

Looking ahead, U.S. export and import prices for April and weekly jobless claims for the week ended May 9 are scheduled for release in the New York session.


InstaForex

Leave a Reply