U.S. Dollar Gains Ground As Fed Chair Powell Hints At Aggressive Rate Hikes

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The U.S. dollar turned higher against its major counterparts in the New York session on Friday, as Federal Reserve Chair Jerome Powell reiterated that the central bank would continue raising rates aggressively to lower inflation.

In his speech at the Jackson Hole Economic Symposium, Powell said that the Fed would keep raising rates until there is confidence that the job is done.

"While the lower inflation readings for July are welcome, a single month's improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down," Powell said.

Reducing inflation could bring a sustained period of below-trend growth, Powell cautioned.

"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," he added.

Revised data from the University of Michigan showed that U.S. consumer sentiment improved much more than previously estimated in August.

The report showed the consumer sentiment index for August was upwardly revised to 58.2 from the previously reported 55.1. Economists had expected the index to be upwardly revised to 55.2.

The currency fell in the European session as the Federal Reserve's preferred gauge of inflation, the core personal consumption expenditures price index, came in below expectations in July.

The core PCE price index edged lower to 4.6 percent year-on-year in July from 4.8 percent last month. Economists had expected the index to ease to 4.7 percent.

The greenback appreciated to a 3-day high of 137.45 against the yen, from a 2-day low of 136.20 seen at 10:00 am ET. The pair was worth 136.44 when it ended deals on Thursday. Next near term resistance for the greenback is likely seen around the 139.00 level.

The greenback rebounded to 0.9650 against the franc, following a 4-day low of 0.9577 set at 10:00 am ET. At Thursday's close, the pair was valued at 0.9632. The greenback is likely to find resistance around the 0.98 level, if it rises again.

The greenback was trading at 0.9996 against the euro, after declining to a 1-week low of 1.0090 at 10:10 am ET. The pair had closed Thursday's deals at 0.9973. The greenback is seen facing resistance around the 0.97 level.

Survey results from the market research group GfK showed that German consumer confidence declined further to a new record low in September as households started to build reserves to meet future energy bills, thus dampening the propensity to buy.

The forward-looking consumer sentiment index fell to -36.5 in September from -30.9 in August. The reading was forecast to fall moderately to -31.8.

The greenback rose to 0.6906 against the aussie, up from a 9-day low of 0.7009 hit at 10:00 am ET. The aussie-greenback pair was worth 0.6981 at Thursday's close. Further rise in the currency may challenge resistance around the 0.67 region.

The greenback firmed to a 3-day high of 1.3027 against the loonie, after a drop to 1.2904 at 9:05 am ET. The greenback was trading at 1.2924 per loonie at yesterday's close. Should the greenback continues its uptrend, 1.32 is possibly seen as its next resistance level.

The greenback touched a 3-day high of 1.1752 against the pound, rising from a 1-week low of 1.1900 it logged at 10:00 am ET. The pound-greenback pair had finished yesterday's trading session at 1.1829. The next possible upside target for the currency is seen around the 1.15 level.

After reaching as low as 0.6232 at 10:00 am ET, the greenback appreciated to more than a 5-week high of 0.6144 against the kiwi. At yesterday's trading close, the pair was quoted at 0.6229. Immediate resistance for the U.S. currency is seen around the 0.60 level.

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