The U.S. dollar plunged from a three-week high on Friday after dovish remarks from Federal Reserve Chairman Jerome Powell, which paved the way for more rate cuts in the coming months.
While his comments were balanced, markets interpreted them as dovish and leaning to pressure from U.S. President Donald Trump to cut interest rates strongly.
The U.S. economy is in a "favorable place" and the Fed will work "act as appropriate" to keep the current economic expansion on track, Fed Powell said at Jackson Hole symposium.
"Business investment and manufacturing have weakened, but solid job growth and rising wages have been driving robust consumption and supporting moderate overall growth." Powell said. "The U.S. economy has continued to perform well overall.”
Powell said the Fed could not determine whether trade wars had hampered business investment and confidence and contributed to the deterioration of global growth through monetary policy.
He noted that "cannot provide a settled rulebook for international trade." Beside "no recent precedents to guide any policy response to the current situation.”
Powell said the Fed needs to "look through" short-term turmoil and focus on how the United States preforming, as he noted that the interest cuts that made in 90s helped to keep the economic expansion in the right place.
Meanwhile, the dollar index lost all its earlier gains falling from a three-week
high of 98.40 to trade at 97.61, after hitting a bottom at 97.56, the lowest
since August 14.