US Dollar Index turns negative on dovish Powell

Jerome Powell

Jerome Powell

A new jobs report on Friday showed USA employers added more than 300,000 jobs in December - well above expectations.

The latest economic data was welcomed by Wall Street, which had been in a downward spiral towards the end of 2018 amid concerns the Federal Reserve would continue to raise rates as the economy slowed.

Powell's Fed hiked rates four times a year ago and projections from its December 19 meeting show officials expect two more hikes in 2019.

"As always, there is no preset path for policy", Powell said during a roundtable discussion with former Fed Chairs Ben Bernanke and Janet Yellen.

The Fed is "prepared to adjust policy quickly and flexibly" to support the economy, he added.

DXY's up move to the 96.60 region, or session highs, is now an ephemeral memory as a effect of the dovish tone from Chief Powell's speech at the annual meeting of the American Economic Association.

Powell said the Fed will act on the current normalization of the balance sheet if conflicts with the Fed's goals arise.

The commander-in-chief has also ripped the Fed on Twitter and in interviews.

Asked at an economic conference in Atlanta if he would step down should Mr Trump request his resignation, Mr Powell said, "No".

Powell and his colleagues at the USA central bank are weighing conflicting signals on the US economy as they try to ensure that the Fed achieves its congressional mandate of low, stable inflation and full employment over the long term. American presidents of the past quarter-century have kept private their opinions about Fed policy so the Fed can focus on employment and inflation rather than feel pressure from the short-term wishes of politicians. Average hourly earnings advanced 3.2 per cent from a year earlier, matching the fastest pace since 2009.

The unemployment rate ticked up by two tenths of a point to 3.9 per cent but that was mostly because more workers were joining the job hunt, according to the closely watched report.

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