Euro falls off week high against dollar after Powell's testimony

Economies.com
2018-07-17 16:51PM UTC

Euro fell in American trade off July 11 highs against the dollar, amid a lack of data from the euro zone, and after earlier positive data from the US, while Federal Reserve Chair Jerome Powell wrapped up the first half of his Congressional testimony. 

 

As of 04:23 GMT, EUR/USD fell 0.45% to 1.1658 from the opening of 1.1711, with an intraday low at 1.1656, and a week high at 1.1745. 

 

European Council President Donald Tusk touted the new free trade deal with Japan as "clear message against trade protectionism", pointing to US President Donald Trump's policies of imposing tariffs on imports from around the world. 

 

The EU and Japan signed a trade deal to bolster trade transactions and flows by taking out barriers and tariffs, with the deal expected to raise Japan's GDP growth by 1%, or 5 trillion yen, and add 290 thousand new jobs as Europe takes out 10% tariffs on Japanese cars, while European exporters will be saved a billion euros. 

 

US Industrial Data 

 

Earlier US data showed industrial production rose 0.6% in June, compared to a 0.5% dip in May, while analysts expected a 0.5% increase. 

 

The Capacity Utilization Rate rose to 78.0% in June from 77.7%, missing expectations of 78.4%. 

 

Powell Testifies 

 

Federal Reserve Chair Jerome Powell presented the first half of his Congressional testimony before the Senate Banking Committee, where he expressed his belief that the job market will remain strong, while asserting that stress tests are important tools in gauging the strength of banks, with the Fed seeking to make the tests more transparent.

 

Powell warned that trade tariffs could hurt the economy in the long term, while tax cuts and government spending will serve to support growth and jobs. 

 

Finally, Powell believes that gradual rate hikes are the only method of maintaining economic recovery, adding that the goal now for the Federal Reserve it to bring the monetary policy back to normal pre-crisis levels. 

 

Powell will present the second half before the House Financial Services Committee tomorrow, with investors looking for clues on future monetary policies and interest rate hikes this year. 

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