US Dollar Index turns negative on dovish Powell

Jerome Powell

Modal Trigger Jerome Powell AFP Getty Images

Federal Reserve Chair Jerome "Jay" Powell took steps to reassure financial markets on Friday, saying that the U.S. central bank would be "patient" about rate rises.

The Fed chairman, responding to a question about what he would do if Trump asked him to step down, said he would not resign.

He added: "We're listening with sensitivity to the message that markets are sending and we're going to be taking those downside risks into account as we make policy going forward".

"If we ever came to the conclusion that any aspect of our plans was somehow interfering with our attainment of our statutory goals, we wouldn't hesitate to change it, and that would include the balance sheet, " he said.

Powell said he has no meeting scheduled with Trump.

The Dow Jones blue chip index rose by 600 points following the. By December 2018, however, Trump was already indicating that he wanted to fire Powell due to rising interest rates that forced deep dives in the stock market.

Dallas Fed President Robert Kaplan said on Thursday that planned rate hikes should be halted for now, while on Friday Mester said she sees only one or two rate hikes this year.

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Powell's remarks reassured investors who have anxious the Fed might raise rates excessively, but Jason Schenker of Prestige Economics suggested the Fed could.

Federal Reserve Chairman Jerome Powell on the state of the US economy, the December jobs report and the ISM report on manufacturing. Fed watchers have said that the bar is very high for the president to remove Powell "for cause" as the law appears to require, provided Powell decides to fight the dismissal in court.

Although still low by historical standards, this latest hike put interest rates at the highest level in almost a decade.

The report also showed the world's largest economy added 312-thousand jobs in December, higher than the expected 176-thousand jobs.

At the time, Powell said there was a "fairly high degree of uncertainty" about the future of further rate hikes, but not that rates have effectively arrived at the lower-end range of neutral.

The greenback, which had slipped against the safe-haven Japanese yen in recent days amid worries about a slowdown in global growth, found support earlier in the session after China announced new measures to support its economy and hopes grew that upcoming U.S. It marked the ninth time the Fed has raised interest rates since 2015.

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