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U.S. dollar rebounds as Fed chair's remarks on gov't shutdown

Xinhua Financein NEW YORK
2019-01-11 08:34

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The U.S. dollar bounced on Thursday, as U.S. Federal Reserve's Chairman Jerome Powell said prolonged government shutdown would lead to unclear prospect and sluggish economic data, which consequently drove up investors' risk aversion and in turn boosted the greenback's safe-haven demand.

"A longer shutdown is something we haven't had," he added. If we have an extended shutdown, I do think that would show up in the data pretty clear," Powell said in a discussion at the Economic Club of Washington on Thursday.

"We would have a less clear picture into the economy if it were to go on much longer," Powell said.

The Fed chair also indicated that monetary tightening would go on, as it will continue to scale back the central bank's balance sheet, which would reduce the amount of money flowing in the market.

"It will be substantially smaller than it is now," Powell said. "It will be smaller than it is now, but nowhere near where it was before."

In terms of Fed's move to raise interest rates, Powell said "We're waiting and watching," as inflation is "low and under control." Such remarks were in line with the wait-and-see stance shown in the Federal Open Market Committee policy meeting minutes released on Wednesday.

The dollar index, which measures the greenback against six major peers, was up 0.34 percent at 95.5431 in late trading.

In late New York trading, the euro was down to 1.1499 dollars from 1.1544 dollars in the previous session, and the British pound decreased to 1.2744 dollars from 1.2794 U.S. dollars in the previous session. The Australian dollar rose to 0.7182 dollar from 0.7180 dollar.

The U.S. dollar bought 108.42 Japanese yen, higher than 108.26 Japanese yen of the previous session. The U.S. dollar rose to 0.9842 Swiss franc from 0.9750 Swiss franc, and it increased to 1.3227 Canadian dollars from 1.3221 Canadian dollars.

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