Tapering would happen by year end but interest rate hikes will not come soon: USD slipped after Powell’s speech at Jackson Hole

USD slid on Friday after Fed Chair Powell gave a speech at Jackson Hole symposium. The speech indicated that tapering would start by yead end, which, however, was not as fast as the market previously had expected. The decision to taper was based on the improved economic condition and the clear trend towards maximum employment. Regarding the interest rate, Powell restated that, scaling back asset purchases should not be considered as equivalent to raising interest rates. The speech has shown that Powell did not adopt the hawkish stance that other Fed officials had.

Because of the delay in the tapering schedule, USD received much pressure as the market turned on its risk appetite. DXY Index ended the week at 92.690, down about 0.42% during Friday’s session. JPY also fell with it, but EUR and CAD both rose.