February 26, 2019 / 2:42 PM / 7 months ago

FOREX-Dollar drops to 3-week low ahead of Fed's Powell testimony

    * U.S. housing starts fell to more than 2-year low
    * Focus on Powell testimony
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates prices, adds comment, FX table, changes byline,
dateline, previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 26 (Reuters) - The dollar fell to a three-week
low on Tuesday, with investors cautious ahead of a key testimony
by Federal Reserve Chairman Jerome Powell later in the session,
in which he might provide further clues about the direction of
future interest rates.
    Powell will testify before the Senate Banking Committee on
the first day of a two-day appearance before lawmakers. Market
watchers expect him to underline the Fed's sensitivity to asset
prices and deliver an upbeat assessment of domestic growth
prospects.
    "The key focus of the market will be on whether Mr. Powell
will deviate from his dovish stance," said Boris Schlossberg,
managing director of FX strategy, at BK Asset Management in New
York.
    "This appears unlikely as the history of Fed policy changes
suggests that it will stick to an easing course to engineer a
soft landing of the economy before resuming normalization," he
added.
    Money markets have ruled out any more rate hikes for the
remainder of the year with an 80 percent probability of a rate
cut by January, 2020.
    A report, meanwhile, showing U.S. housing starts fell to a
more than two-year low in December did not help the dollar's
cause, further affirming expectations that Powell will maintain
his dovish views.
    Data showed housing starts dropped 11.2 percent to a
seasonally adjusted annual rate of 1.078 million units last
month, the weakest reading since September 2016.
    Against a basket of other currencies, the dollar was
down 0.1 percent at 96.34, after earlier hitting a three-week
trough of 96.253.
    The dollar was also down 0.2 percent versus the yen at
110.74.
    
    ========================================================
    Currency bid prices at 9:34AM (1434 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1364        $1.1358     +0.05%         -0.93%      +1.1375     +1.1345
 Dollar/Yen       JPY=        110.7500       111.0600    -0.28%         +0.44%      +111.0800   +110.6700
 Euro/Yen         EURJPY=     125.86         126.11      -0.20%         -0.29%      +126.2200   +125.7400
 Dollar/Swiss     CHF=        1.0003         1.0006      -0.03%         +1.93%      +1.0013     +0.9995
 Sterling/Dollar  GBP=        1.3169         1.3095      +0.57%         +3.23%      +1.3237     +1.3091
 Dollar/Canadian  CAD=        1.3222         1.3188      +0.26%         -3.04%      +1.3236     +1.3185
 Australian/Doll  AUD=        0.7153         0.7165      -0.17%         +1.48%      +0.7173     +0.7143
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1368         1.1364      +0.04%         +1.01%      +1.1379     +1.1352
 Euro/Sterling    EURGBP=     0.8626         0.8674      -0.55%         -3.98%      +0.8676     +0.8589
 NZ               NZD=        0.6881         0.6882      -0.01%         +2.44%      +0.6888     +0.6872
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5845         8.5961      -0.13%         -0.63%      +8.6253     +8.5815
 Euro/Norway      EURNOK=     9.7552         9.7630      -0.08%         -1.52%      +9.7879     +9.7547
 Dollar/Sweden    SEK=        9.3099         9.3066      +0.08%         +3.86%      +9.3291     +9.2999
 Euro/Sweden      EURSEK=     10.5820        10.5737     +0.08%         +3.10%      +10.5980    +10.5710
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London)
  
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