Dollar Up as Powell Rejects Negative Rates

The dollar was up on Thursday morning in Asia after U.S. Federal Reserve chair Jerome Powell rejected the possibility of negative rates.

In a highly anticipated speech on Wednesday, Powell joined a list of policymakers to fend off the notion, even after Fed futures began pricing a chance of negative U.S. rates within the next year.

“The committee’s view on negative rates really has not changed. This is not something that we [the Federal Open Market Committee] are looking at,” he said.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.03% to 100.317 by 11:47 AM ET (4:47 AM GMT).

“The dollar managed to bounce back after Powell’s comments on negative rates, but now the dollar’s bias is fairly neutral. There could be some safe-have flows into the dollar, but everyone is facing the same economic problems caused by the coronavirus.” Takuya Kanda, general manager of the research department at Research Institute, told CNBC.

The USD/JPY pair was down 0.11% to 106.91.

The AUD/USD pair lost 0.29% to 0.6435 after Australia’s statistics bureau reported a record employment slump of 594,300 in April.

Meanwhile, the NZD/USD pair lost 0.04 % to 0.5988. The Kiwi government will hand out its budget later in the day, which is expected to include fiscal stimuli to repair the COVID-19 economic damage.

The Reserve Bank of New Zealand also flagged the possibility of negative interest rates a day earlier.

The USD/CNY pair gained 0.08% to 7.0969. Investors will be looking at China’s first quarter industrial production, retail sales and investment data, to be released on Friday, to gauge the speed of its recovery even as the country battles a second wave of outbreaks.

The GBP/USD pair was down 0.18% to 1.2207.

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