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Dollar Dropping On Powell Comments

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The dollar has turned sharply lower against its major rivals Wednesday afternoon as traders react to comments from Federal Reserve Chairman Jerome Powell. In a highly anticipated speech before the Economic Club of New York, Federal Powell described the current level of interest rates as "just below" neutral following a series of rate hikes this year.

Powell noted the Fed began gradually raising interest rates from near-zero levels about three years ago as the economy improved.

The Fed has raised three times in 2018 to a range of 2 to 2.25 percent and has forecast another rate hike before the end of the year.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy--that is, neither speeding up nor slowing down growth," Powell said.

The latest remarks seem to conflict with comments Powell made early last month, when he said rates were a "long way from neutral."

Economic growth in the U.S. was unrevised in the third quarter, according to the second reading released by the Commerce Department on Wednesday. The report said real gross domestic product jumped by 3.5 percent in the third quarter, unrevised from the initial estimate and in line with economist estimates.

New home sales in the U.S. showed a substantial decrease from an upwardly revised level in the month of October, according to a report released by the Commerce Department on Wednesday. The Commerce Department said new home sales plummeted by 8.9 percent to an annual rate of 533,000 in October from an upwardly revised rate of 597,000 in September.

Economists had expected new home sales to rise to a rate of 575,000 from the 553,000 originally reported for the previous month.

The dollar has dropped to a 2-day low of $1.1385 against the Euro Wednesday afternoon, from a high of $1.1267.

Germany's consumer confidence is set to slightly weaken at the end of the year as high inflation rates and global economic uncertainty weigh on households' sentiment, survey results from the GfK showed on Wednesday.

The forward-looking consumer confidence indicator is set to drop to 10.4 from 10.6 in November, the Nuremberg-based GfK said in its latest report. Economists had forecast a reading of 10.5.

The buck has fallen to $1.2850 against the pound sterling this afternoon, from an early high of $1.2732.

The greenback has pulled back from a 2-week high of Y114.036 to around Y113.500 this afternoon.

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