The Fed should raise rates further this year and probably next year as well, despite Trump's opposition to tighter policy, Kansas City Fed President Esther George said in interviews airedon Thursday. In this case, the EUR/USD will likely find acceptance above the 50-day MA, now located at 1.1608.The German second-quarter GDP, due for release at 06:00 GMT, and the US durable goods orders figure, scheduled for release at 12:30 GMT, may not have a big impact on the pair as investors are likely to stay on the sidelines ahead of Powell's speech.
The dollar weakened as Powell, speaking in Jackson Hole, Wyoming, said a gradual approach of raising rates remains appropriate to protect the US economy and job growth, despite President Donald Trump's criticism of higher borrowing costs.
- The soft price action around Fed Chair Powell's speech is another sign that the US Dollar is likely topping out in the short-term. Aphria rose 5.4 percent, the most on the main index, while Canopy Growth and Aurora Cannabis gained about 2 percent each.
The benchmark S&P 500 index .SPX and the Nasdaq Composite .IXIC hit all-time highs after Powell's speech while the dollar.DXY weakened against a basket of currencies. However, the Kansas City Fed's annual conference here is among the central bank's higher profile annual events, drawing global media attention and an audience including representatives of other nations' central banks.
Trump has repeatedly said he is "not thrilled" with Powell's raising of interest rates.
Antoinette Schoar, an economist who teaches at the MIT Sloan School of Management, said the Fed should remain "above the fray".
-USD slides after Powell talks policy in Jackson Hole. The common currency picked up a bid at the low of 1.1301 on August 15 as the investors scaled back expectations of Fed rate hikes in the wake of the turmoil in Turkey and other emerging markets. Further, Trump's criticism of the Fed triggered fears the central bank may slow down the pace of policy tightening in the near future.
St. Louis Fed President James Bullard said earlier on Friday he'd prefer a pause on the rate hikes, given that the economic stimulus from the Trump administration's tax cuts and a budget agreement that boosts government spending will likely fade next year. The talks between the two nations ended as their trade war escalated on Thursday after a new round of US tariffs kicked in on $16 billion worth of imports from China, followed immediately by reciprocal tariffs from China. a safe haven currency, the dollar has benefited from fears of worldwide trade turmoil in recent months.
"I see the current path of gradually raising interest rates ... to taking seriously both of these risks", he said. "And we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent".
"I am confident that the FOMC would resolutely "do whatever it takes" should inflation expectations drift materially up or down or should crisis again threaten", he said in prepared remarks.
The Fed "has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides", Powell said.
"While inflation has recently moved up near 2 percent, we have seen no clear sign of an acceleration above 2 percent, and there does not seem to be an elevated risk of overheating".
"My colleagues and I are carefully monitoring incoming data", he said.
"I'm not thrilled with his raising of interest rates, no".