News: FOREX-Dollar slips after Powell beckons tapering, holds on rate hikes

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    • Powell's speech perceived to be dovish
    • Tapering timeline on table, but not interest rate lift-off
    • Kiwi dips after Auckland lockdown extended
    • Swedish crown flat after mixed economic data

    (Adds comments, fresh prices)

    The dollar slid on Friday after the market perceived a highly anticipated speech by Federal Reserve Chair Jerome Powell to be dovish, even as he indicated tapering the U.S. central bank's massive support to the economy could start by year's end.

    Powell said there had been clear progress toward maximum employment and he was of the view that if the U.S. economy evolved broadly as anticipated, "it could be appropriate to start reducing the pace of asset purchases this year."

    But Powell told the Fed's annual Jackson Hole symposium that the timing and pace of tapering should not be seen as a signal for when interest rates will begin to rise, a message the market perceived as being dovish as it will keep credit cheap.

    The speech showed Powell has finally committed to a timeline on tapering, but that he did not adopt the hawkish stance of some Fed officials, said Gregory Anderson, global head of FX strategy at BMO Capital Markets.

    "It's pretty clear that if you were worried about the timeline, that we announce in September that we're going to taper starting Oct. 1, that's not there in this speech," Anderson said.

    "It's not as bad as feared based on the most extreme of the hawks," he added. The dollar index =USD , which measures the greenback's performance against a basket of six major currencies, fell 0.42% to 92.6540.

    The euro EUR=EBS rose 0.39% to $1.1797, while the yen JPY= rose 0.23% at $109.8200. After minutes of the Fed's policy-setting meeting in July were released last week, the dollar marched higher because most participants anticipated tapering to begin this year.

    Powell was clear to detach tapering from "the rate liftoff," or raising interest rates, said David Petrosinelli, senior trader at Insperex in New York.

    Powell wanted to ensure the market does not expect the beginning of tapering to mean the onset of a Fed tightening cycle, Petrosinelli said. "He was very clear to delineate that."

    The dollar tumbled as market participants sharply lowered expectations for the Fed’s long-term tightening trajectory, said Karl Schamotta, director Of global product and market strategy at Cambridge Global Payments in Toronto.

    "Powell is dropping a hammer on the middle of the interest rate curve and compelling traders to search for yield in foreign markets," Schamotta said.

    The dollar began to retreat about 15 minutes before Powell spoke, after James Bullard, president of the St. Louis Fed, reiterated his hawkish view that tapering should begin soon and the program end by next year's first quarter. [nS0N2O301G}

    Benchmark 10-year Treasury yields US10YT=RR fell 2.5 basis points to trade at 1.3188%, after jumping to 1.375%, the highest since Aug. 12, on Thursday following bullish comments by another regional Fed president.

    Overnight, the safe-haven dollar got some support after Thursday's suicide bomb attack at Kabul airport.

    The New Zealand dollar NZD=D4 dipped slightly after Prime Minister Jacinda Ardern announced that a lockdown against COVID-19 in Auckland is likely to remain in place for another two weeks.

    The Swedish crown SEK=D3 was flat at 8.7070 after mixed economic data. The Canadian dollar CAD=D3 fell 0.57% to 1.2612 versus the U.S. dollar.

    ======================================================== 
    	Currency bid prices at 12:40PM (1640 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	   High Bid	Low Bid 
    											  Previous				   Change					
    											  Session											  
     Dollar index	  =USD	   92.6540		93.0530	 -0.42%		 2.971%		+93.1830	+92.6470 
     Euro/Dollar	   EUR=EBS	$1.1797		$1.1751	 +0.39%		 -3.45%		+$1.1802	+$1.1735 
     Dollar/Yen		JPY=EBS	109.8200	   110.0850	-0.23%		 +6.30%		+110.2600   +109.8200 
     Euro/Yen		  EURJPY=	129.54		 129.36	  +0.14%		 +2.06%		+129.7400   +129.1600 
     Dollar/Swiss	  CHF=EBS	0.9113		 0.9180	  -0.71%		 +3.03%		+0.9199	 +0.9114 
     Sterling/Dollar   GBP=D3	 $1.3772		$1.3703	 +0.51%		 +0.81%		+$1.3781	+$1.3679 
     Dollar/Canadian   CAD=D3	 1.2612		 1.2685	  -0.57%		 -0.96%		+1.2708	 +1.2611 
     Aussie/Dollar	 AUD=D3	 $0.7315		$0.7238	 +1.08%		 -4.90%		+$0.7316	+$0.7222 
     Euro/Swiss		EURCHF=	1.0748		 1.0786	  -0.35%		 -0.53%		+1.0797	 +1.0751 
     Euro/Sterling	 EURGBP=	0.8565		 0.8578	  -0.15%		 -4.16%		+0.8589	 +0.8560 
     NZ				NZD=D3	 $0.7015		$0.6948	 +0.98%		 -2.30%		+$0.7016	+$0.6934 
     Dollar/Dollar																					 
    
     Dollar/Norway	 NOK=D3	 8.7150		 8.8425	  -1.44%		 +1.49%		+8.8700	 +8.7150 
     Euro/Norway	   EURNOK=	10.2805		10.3893	 -1.05%		 -1.78%		+10.4216	+10.2804 
     Dollar/Sweden	 SEK=	   8.6356		 8.7040	  -0.41%		 +5.36%		+8.7219	 +8.6357 
     Euro/Sweden	   EURSEK=	10.1890		10.2314	 -0.41%		 +1.12%		+10.2517	+10.1882 
    	<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    World FX rates	https://tmsnrt.rs/2RBWI5E 
    
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