U.S. Dollar Falls After Fed Evans Backs Gradual Hike In Rates
CANBERA (dpa-AFX) - The U.S. dollar was defensive against its major rivals in the European session on Tuesday, after Chicago Federal Reserve President Charles Evans reinforced hopes for a less aggressive pace of interest rate hike, echoing dovish outlook by the Fed last week.
In a speech on Monday, Evans backed call for raising interest rates twice more this year, although the pace of hikes could be more or less aggressive depending on inflation and fiscal measures from the Trump Administration.
"If the growth outlook solidifies and I have more confidence that inflation is going up, three for the entire year is entirely reasonable," Evans told to Fox Business Network.
On the contrary, in an interview on CNBC's "Squawk Box," Minneapolis Fed President Neel Kashkari said he voted against the rate hike because inflation is still below the central bank's 2 percent target.
Investors focus on speeches by Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren later in the day and the Fed Chair Janet Yellen on Thursday for more clues about monetary policy.
The currency has been trading in a negative territory against its major rivals in the Asian session, with the exception of the pound.
The greenback dropped to a 4-day low of 0.9949 against the Swiss franc, from an early 5-day high of 1.0002. The greenback is likely to challenge support around the 0.98 zone.
Data from the Federal Customs Administration showed that Switzerland's trade surplus declined in February as exports decreased amid an increase in imports.
The trade surplus declined to CHF 3.3 billion in February from CHF 4.8 billion in January.
The greenback edged down to 112.49 against the yen, off early high of 112.86. This may be compared to an early 3-week low of 112.26. If the greenback-yen pair extends decline, 110.00 is possibly seen as its next support level.
The greenback fell to a 1-1/2-month low of 1.0804 against the euro, coming off from an early 5-day high of 1.0719. Continuation of the greenback's downtrend may see it challenging support around the 1.09 region.
Reversing from an early high of 1.2340 against the pound, the greenback dropped to more than a 3-week low of 1.2474. The next possible support for the greenback is seen around the 1.26 area.
Bank of England Chief Economist Andy Haldane said using monetary policy to boost productivity may be ineffective.
"Should monetary policymakers have sacrificed 1.5 million jobs for the sake of an extra 1 or 2 percent of productivity? Hand on heart, I can tell you this one would not knowingly have done so," he said at the London School of Economics.
The greenback reversed from early highs of 0.7032 against the kiwi, 0.7699 against the aussie and 1.3365 against the loonie and was trading lower at 0.7060, 0.7735 and 1.3321,respectively. The greenback is seen finding support surrounding the 0.72 against the kiwi, 0.79 against the aussie and 1.30 against the loonie.
Looking ahead, Federal Reserve Deputy Director for Division of Bank Supervision and Regulation Maryann Hunter will attend American Bankers Association's Government Relations Summit in Washington at 7:45 am ET.
In the New York session, Canada retail sales data is set to be published.
At 12:00 pm ET, Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy and the Federal Reserve before an event hosted by Women in Housing and Finance, in Washington.
At 3:45 pm ET, Bank of Canada Deputy Governor Lawrence Schembri will deliver a speech at the Greater Vancouver Board of Trade.
Copyright RTT News/dpa-AFX