U.S. Dollar Extends Slide As Fed's Powell Signals Rate Cut

(RTTNews) - The U.S. dollar continued to be weaker against other major currencies in the Asian session on Wednesday, following comments made by Federal Reserve (Fed) Chair Jerome Powell that strengthened bets on an interest rate drop this month.

In a speech in Philadelphia on Tuesday, Powell stated that the U.S. economy is increasingly at risk from a severe slowdown in hiring, implying that the U.S. central bank will probably lower its key interest rate twice more this year.

In December, traders anticipate that the Fed will cut its benchmark interest rate once again after lowering it by 25 basis points (bps) to the range of 3.75% to 4.00%.

The September jobs report and other economic data have been postponed due to the U.S. government shutdown. Prior to the Fed's October 28-29 meeting, an update on the Consumer Price Index (CPI) is now planned for October 24.

Asian stock markets traded higher, as traders remain optimistic about further interest rate cuts after U.S. Fed Chair Jerome Powell signaled two more quarter-point interest-rate cuts this year, citing a sharp slowdown in hiring. Meanwhile, concerns about ongoing trade tensions between the U.S. and China are weighing on the markets.

Powell cautioned that "there is no risk-free path for policy as we navigate the tension between our employment and inflation goals."

U.S. President Donald Trump accused China of an "economically hostile act" by purposefully not buying U.S. soybeans and threatened to terminate business with China having to do with cooking oil and other elements of trade as retribution. Both sides have now tightened their grip on each other's shipping vessels by imposing special port charges.

China said the U.S. has continued to impose a series of new restrictive measures on China, which have seriously harmed China's interests and seriously undermined the atmosphere of the bilateral trade talks."

In the Asian trading today, the U.S. dollar fell to an 8-day low of 151.01 against the yen, from yesterday's closing value of 151.70. The greenback may test support near the 148.00 region.

Against the euro and the Swiss franc, the greenback dropped to 2-day lows of 1.1626 and 0.7999 from Tuesday's closing quotes of 1.1603 and 0.8015, respectively. If the greenback extends its downtrend, it is likely to find support around 1.18 against the euro and 0.78 against the franc.

The greenback touched yesterday's low of 1.3354 against the pound, from Tuesday's closing value of 1.3222. On the downside, 1.35 is seen as the next support level for the greenback.

Looking ahead, U.S. MBA mortgage approvals data, Canada manufacturing and wholesale sales data for August, U.S. New York Empire state manufacturing index for October and U.S. Fed Beige book report are slated for release in the New York session.