NEW YORK, June 4 (Xinhua) -- The U.S. dollar dropped in late trading on Tuesday, as investors digested the latest speech by U.S. Federal Reserve Chairman Jerome Powell.
The Fed chair said the U.S. central bank would "act as appropriate to sustain the expansion" as they have been observing how the lingering trade frictions would affect U.S. economy.
"We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective," Powell said in a speech on Tuesday.
Analysts said the speech fueled market expectations on further interest rate cuts to avert economic slowdown, as Powell noted the Fed would put itself in the "best position" to deal with the next encounter with recession.
"My FOMC colleagues and I must and do take seriously the risk that inflation shortfalls that persist even in a robust economy could precipitate a difficult-to-arrest downward drift in inflation expectations," he said.
The speech was also in line with the remarks of Federal Reserve Bank of St. Louis President James Bullard on Monday, which stressed "a downward policy rate adjustment."
"Both inflation and inflation expectations remain below target, and signals from the Treasury yield curve seem to suggest that the current policy rate setting is inappropriately high," he noted.
"A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown," he added.
The dollar index, which measures the greenback against six major peers, fell 0.07 percent at 97.0699 in late trading.
In late New York trading, the euro increased to 1.1259 dollars from 1.1257 dollars in the previous session, and the British pound increased to 1.2704 dollars from 1.2665 U.S. dollars in the previous session. The Australian dollar rose to 0.6997 dollar from 0.6977 dollar.
The U.S. dollar bought 108.05 Japanese yen, higher than 108.03 Japanese yen of the previous session. The U.S. dollar was down to 0.9907 Swiss franc from 0.9923 Swiss franc, and it was down to 1.3395 Canadian dollars from 1.3437 Canadian dollars. Enditem
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