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The US dollar held gains on Tuesday against a basket of major currencies following an upbeat economic assessment from the head of the US Federal Reserve, while world stocks edged higher, with Wall Street erasing earlier losses.
In written testimony for the Senate Banking Committee, Fed Chairman Jerome Powell said the economy was on the cusp of “several years” of the job market remaining strong and inflation remaining around the Fed’s 2 per cent target.
Asset moves were generally modest following Powell’s prepared remarks, in which he signalled he believed the economy was doing well and that an era of stable growth may continue, provided the Fed gets its policy decisions right.
The US dollar pared gains against a basket of currencies immediately following the release of the testimony, but then bounced back. “I suspect the market was pricing itself for a potential hawkish surprise, which it didn’t get,” said Richard Franulovich, head of FX strategy at Westpac Banking Corporation in New York. “But I mean when you parse the comments there’s nothing dovish in there. Far from it. The conditions are still solid. He’s pretty upbeat on the outlook.” The Dow Jones Industrial Average rose 8.08 points, or 0.03 per cent, to 25,072.44, the S&P 500 gained 3.87 points, or 0.14 per cent, to 2,802.3 and the Nasdaq Composite added 7.87 points, or 0.1 per cent, to 7,813.59.
Netflix shares tumbled 8.6 per cent after the company’s subscriber growth fell short of Wall Street expectations. MSCI’s gauge of stocks across the globe gained 0.01 per cent, while the pan-European FTSEurofirst 300 index rose 0.17 per cent.
The dollar index, tracking it against a basket of major currencies, rose 0.28 per cent, with the euro down 0.17 per cent to $1.1689. Benchmark 10-year notes last fell 2/32 in price to yield 2.8619 per cent, from 2.856 per cent late on Monday.
Oil steadied after steep declines on Monday, including a three-month low for Brent. Worries over supply disruptions eased and the focus moved to increasing production and potential damage to global growth from the U.S.-China trade dispute.
US crude fell 0.96 per cent to $67.41 per barrel and Brent was last at $72.03, up 0.26 per cent on the day. US Federal Reserve Chairman Jerome Powell, discounting the risk that a trade war may throw a global recovery off track, said the economy is on the cusp of “several years” where the job market remains strong and inflation stays around the Fed’s 2 per cent target.
He added some language that the risk was roughly balanced, that the economy might be worse than expected or better than expected, for now.
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