TOKYO (Reuters) – The dollar was on the defensive against its rivals on Tuesday, as traders looked to a Federal Reserve Chairman, and Jerome Powell’s speech, in the middle of the speculation on the rise in the united States might one day adopt a negative interest rate.
FILE PHOTO: A woman counts U.s. dollar bills at her home in the city of Buenos Aires, Argentina, August 28, 2018. This Photo was taken on August 28, 2018. REUTERS/Marcos Brindicci
The new zealand dollar fell to ” this week’s low after the country’s central bank to expand its asset purchase program and indicated readiness to take additional measures — including negative interest rates.
The dollar traded at 107.21 yen was little changed, so that, in Asian trade, having slipped from Tuesday, on the sidelines of the summit, or, 107.76, its highest since April 24.
The euro changed hands at $1.0848 after having gained about 0.4 percent in the previous session.
U. s. The president, Donald Trump, on Tuesday once again pushed the Federal Reserve to adopt a negative interest rate, a hot topic in the financial markets since last week, when the U. S. money-market instruments (ti) has started to price in a chance of negative rates.
The data showed Tuesday that U. s. consumer prices fell 0.8% in April, the biggest since the Great Recession, raising the specter, or the deflation of the economy sinks deeper into recession and the debate on the policy responses.
(Chart – U. s. inflation of the IMAGE: here)
“I would advise against a negative interest rate. Japan has done, but the perception that it was not very good,” said Hiroyuki Ueno, a senior strategist at Sumitomo Mitsui Trust Asset Management.
“But what is worrying is that He is talking about them. Looking to adapt the examples, the Fed has finally done what He wanted often enough.”
Powell, will be speaking on current economic issues in a webinar organized by the Peterson Institute for International Economics, at 9:00 pm (1300 GMT).
Up to now, Fed officials have said they do not see the need to reduce the interest rate below zero, and some market players expect Barry to stick to that script.
“If the markets price in the U. s. negative rates, the Fed will need more communication to rewind such a market moves to a higher cost,” said Kazushige Kaida, head of FX sales at State Street Bank and Trust, Tokyo Branch.
“I think his message is likely to be something in the line that the Fed has focused its efforts on credit easing or negative interest rates.”
However, investors think this is going to become an option, especially if the corona virus leads to a new deterioration of the U. s. economy.
Top U.s. infectious disease advisor, Anthony Fauci, on Tuesday warned the Congress that a premature lifting or locking could lead to new outbreak of the corona virus deadly.
His comments cast a shadow on the optimism in the global financial markets in recent weeks as the worst period of the epidemic is over and that the economy can only get better.
U. s. the price of the shares also slipped, led by high-flying technology shares, adding to the cautious mood on the economic outlook.
That will put a brake on a rally in risk-sensitive currencies such as the Australian dollar.
The Australian dollar last stood at $0.6476, little changed on the day, and off Tuesday’s one-week high of $0.6562.
The new zealand dollar lost 0.6% to $0.6036, touching its lowest level this week, after the Reserve Bank of New Zealand, the announcement of the policy.
It has expanded the asset purchases for a total of NZ$60 billion from NZ$33 billion, while its policy, the minutes of the said negative interest rates are a future policy option.
The pound sterling stood near its lowest level in five weeks, to $1.2269, have hammered that as a result of the confusion over the government’s plans to facilitate this moment of your cube, in the worst COVID-19, the number of deaths across Europe, and revived brexit risks.
The official data published on Tuesday showed Britain without the death of COVID-19 exceeded 40 000 at the beginning of May, with the location in Italy as the most affected country in Europe.
Reporting by Hideyuki Sano; Editing by Stephen Coates and Sam Holmes