Breaking News: USD tumbles down on Powell's hesitant comments

Yohay Elam FXStreet

Fed Chair Jerome Powell said the there is no sign of an overheating of the economy and that there is no clear sign inflation is accelerating beyond the Fed's target. The economy is doing well, but not going wild, is the general message.

In addition, Powell adds conditionality to the current path of rate hikes. He says (emphasis added:

if the strong growth in income and jobs continues, further gradual increase in the target range for the federal funds rate will likely be appropriate

The conditionality, borrowing a page from ECB President Mario Draghi, shows some hesitance.

The Fed Chair said real wages have grown slowly for medium and low-income workers in recent decades. He did repeat some optimistic comments such as that there is a good reason to believe that the strong growth will continue. While the September rate hike is not in danger, Powell is less hawkish than usual. Under his leadership, the Fed has been more hawkish than under his predecessor Janet Yellen.

The US Dollar is falling.across the board. The EUR/USD reached a peak of 1.1639, the GBP/USD hit a high of 1.2881, and the USD/JPY slipped into negative territory for the day.

More: Is the US economy peaking out? Too many indicators are going in the wrong direction

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.