February 26, 2019 / 5:18 PM / 22 days ago

FOREX-Dollar drops to three-week low after Fed Powell's testimony

    * Fed's Powell sticks to patient approach on rate hikes 
    * U.S. housing starts fall to more than 2-year low
    * U.S. consumer confidence rises in February
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 26 (Reuters) - The dollar fell to a three-week
low in choppy trading on Tuesday as Federal Reserve Chairman
Jerome Powell repeated that the U.S. central bank would remain
patient on monetary policy, suggesting that it was unlikely to
raise interest rates anytime soon.
    The dollar initially inched higher as Powell stayed on
script at a U.S. Senate Banking Committee hearing on Tuesday,
but it slipped in his question-and-answer session with U.S.
senators.
    In prepared testimony released in advance of two days of 
hearings on Capitol Hill, Powell said the Fed would remain
"patient" in deciding on further interest rate hikes,
reaffirming the policy shift made by the central bank in
January.
    The greenback's earlier advance was also helped by news of a
jump in U.S. consumer confidence, which came as Powell spoke. 
    "The basic message that Powell is sending is that the Fed
needs to be cautious. At this point, the Fed seems to be
suggesting that there are doubts on the economy," said Juan
Perez, senior currency trader at Tempus Inc in Washington.
    "Powell mentioned the U.S. labor market and it seems like
he's not necessarily convinced that it's great. He believes
there could always be slack and that's the reason why the Fed
will not just continue on this path toward 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.
    Shortly after midday, the dollar index, a measure of its
value against a basket of other currencies, fell 0.2
percent at 96.206, after hitting a three-week trough of 96.151.
    The euro rose 0.2 percent versus the dollar to $1.1377
, while the greenback slid 0.3 percent against the
Japanese yen to 100.73.
    The dollar benefited from a jump in the U.S. consumer
confidence index for February to 131.4, from a revised 121.7
reading in January.
    But a report showing U.S. housing starts falling to a more
than two-year low in December dampened dollar demand.

    Improving risk appetite lifted the British pound following
media reports that Prime Minister Theresa May was considering
delaying the March 29 deadline for the UK's exit from the
European Union.
    "With political risk, if you can delay it or remove the
prospect of a no-deal Brexit, it will always be met with
optimism and a rally in the currency," said Erik Nelson,
currency strategist, at Wells Fargo Securities in New York.
    The pound was last up 1.3 percent at $1.3260.
    
    ========================================================
    Currency bid prices at 11:52AM (1652 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1373        $1.1358     +0.13%         -0.84%      +1.1380     +1.1345
 Dollar/Yen       JPY=        110.7400       111.0600    -0.29%         +0.44%      +111.0800   +110.6700
 Euro/Yen         EURJPY=     125.98         126.11      -0.10%         -0.19%      +126.2200   +125.7200
 Dollar/Swiss     CHF=        1.0000         1.0006      -0.06%         +1.90%      +1.0019     +0.9995
 Sterling/Dollar  GBP=        1.3253         1.3095      +1.21%         +3.89%      +1.3283     +1.3091
 Dollar/Canadian  CAD=        1.3182         1.3188      -0.05%         -3.34%      +1.3236     +1.3178
 Australian/Doll  AUD=        0.7176         0.7165      +0.15%         +1.80%      +0.7184     +0.7143
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1373         1.1364      +0.08%         +1.06%      +1.1381     +1.1352
 Euro/Sterling    EURGBP=     0.8580         0.8674      -1.08%         -4.50%      +0.8676     +0.8563
 NZ               NZD=        0.6885         0.6882      +0.04%         +2.50%      +0.6895     +0.6871
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5791         8.5961      -0.20%         -0.69%      +8.6253     +8.5778
 Euro/Norway      EURNOK=     9.7600         9.7630      -0.03%         -1.47%      +9.7879     +9.7547
 Dollar/Sweden    SEK=        9.3002         9.3066      +0.07%         +3.75%      +9.3291     +9.2995
 Euro/Sweden      EURSEK=     10.5808        10.5737     +0.07%         +3.09%      +10.5980    +10.5710
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; 
Editing by Susan Thomas and Richard Chang)
  
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