July 17, 2018 / 2:53 PM / a month ago

FOREX-Dollar gains after Powell's upbeat tone in testimony

    * Powell strikes hawkish tone in U.S. testimony
    * Concerns mount over impact of trade war
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Recasts, adds Powell's testimony, FX table, analyst comment;
updates prices, changes dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 17 (Reuters) - The dollar rose on Tuesday as
Federal Reserve Chairman Jerome Powell provided an upbeat
assessment on the U.S. economy while downplaying the impact of
current global trade policy discussions on the outlook for
further monetary tightening.
    Investors were watching Powell's comment on global trade for
any hint that it may slow the pace of interest rate increases.
When Powell did not dwell on global trade, analysts said that
was a green light to buy U.S. dollars.
    Powell said in his prepared remarks before the Senate
Banking Committee that it would be difficult to predict how
trade policy negotiations could impact the U.S. economy. He also
said the economy is on the cusp of "several years" in which the
job market remains strong and inflation stays around the Fed's 2
percent target.
    "When you parse the comments, there's nothing dovish in
there," said Richard Franulovich, head of FX strategy, at
Westpac Banking Corp in New York.
    "The conditions are still solid. He's pretty upbeat on the
outlook. The global picture is solid... He rattled off a long
list of reasons why you should expect solid growth."
    In late morning trading, the dollar rose 0.2 percent at
94.727 against a basket of six major currencies. 
    The currency rose to a 12-month high of 95.53 in late June
and has rallied more than 5 percent in the past three months.
    The dollar traded up 0.5 percent against the yen at 112.86
yen.
    
    CONCERNS
    The dollar's gains this year have been capped by worries
over the intensifying trade dispute between the United States
and China, though the concerns have not derailed the greenback's
solid performance so far.
    The International Monetary Fund warned on Monday that
escalating and sustained trade conflicts after U.S. tariff
action threaten to derail economic recovery and depress
medium-term growth prospects.
    Analysts are uncertain how the Fed would react if the trade
conflict with China worsens - either with aggressive rate
increases because of the inflationary effect of the import
tariffs or with a pause in the cycle because of growth
dampening.
    Other major currencies traded in narrow ranges on Tuesday.  
 
    The euro added 0.1 percent against the dollar to $1.1694
after weakening half a percent last week. The pound fell 0.5
percent against the dollar at $1.3165 following weak UK data and
after news Prime Minister Theresa May faces yet another
challenge in a divided parliament over wording in her Brexit
bill.
    
    ========================================================
    Currency bid prices at 10:38AM (1438 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1686        $1.1709     -0.20%         -2.58%      +1.1744     +1.1684
 Dollar/Yen       JPY=        112.8900       112.2800    +0.54%         +0.20%      +112.9000   +112.2400
 Euro/Yen         EURJPY=     131.93         131.48      +0.34%         -2.40%      +131.9700   +131.4600
 Dollar/Swiss     CHF=        0.9970         0.9966      +0.04%         +2.33%      +0.9975     +0.9927
 Sterling/Dollar  GBP=        1.3157         1.3233      -0.57%         -2.63%      +1.3268     +1.3146
 Dollar/Canadian  CAD=        1.3182         1.3133      +0.37%         +4.81%      +1.3192     +1.3111
 Australian/Doll  AUD=        0.7390         0.7418      -0.38%         -5.27%      +0.7438     +0.7387
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1651         1.1671      -0.17%         -0.33%      +1.1681     +1.1640
 Euro/Sterling    EURGBP=     0.8880         0.8849      +0.35%         -0.03%      +0.8898     +0.8842
 NZ               NZD=        0.6783         0.6775      +0.12%         -4.28%      +0.6840     +0.6759
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.1196         8.0983      +0.26%         -1.06%      +8.1248     +8.0764
 Euro/Norway      EURNOK=     9.4891         9.4852      +0.04%         -3.65%      +9.4975     +9.4753
 Dollar/Sweden    SEK=        8.8127         8.8234      -0.34%         +7.45%      +8.8277     +8.7734
 Euro/Sweden      EURSEK=     10.2983        10.3330     -0.34%         +4.67%      +10.3400    +10.2930
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
James Thorne in New York and Tom Finn in London; Editing by Dan
Grebler)
  
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