US Dollar drops after indications of Federal Reserve on delay in hikes

KUWAIT, Feb 14 (KUNA) -- The US dollar dropped last week after the Federal Reserve had indicated that it will delay hiking interest rates, said a report on Sunday.
Janet Yellen, head of the Federal Reserve, failed to calm the markets as she indicated that further rate hikes could be delayed, National Bank of Kuwait (NBK) added in its report. In her testimony, she stated that there are good reasons to believe that the US will stay on a path of moderate growth that will allow the Fed to pursue "gradual" adjustments to monetary policy, it said. However, she also acknowledged risks facing the US economy from tightening financial conditions driven by falling stock prices and uncertainty over China, it said.
When the debate on whether central banks should adopt negative interest rates was raised, Yellen stated that while she is "not aware" of any restrictions that would prevent the Fed from offering rates below zero, she does not expect that it will be forced to cut rates anytime soon, it noted.
Europe's major banking stocks fell heavily after Sweden's Central Bank unexpectedly lowered its repo rate deeper into negative territory on Thursday, the report showed. The move fueled concerns that other central banks in the euro zone could follow suit, amid low employment, weak economic growth and stubbornly low inflation, it said, adding that the move follows the Bank of Japan's surprising decision to implement a negative interest rate policy for the first time in the central bank's history. With the European Central Bank's deposit rate already in negative territory. On the foreign exchange side, the Dollar dropped as global growth concerns combined with Yellen's remarks dampened expectations that the Fed will continue to follow its path to raise interest rates this year. The Eurozone grew quarterly at a meager rate of 0.3 percent in the final three months of 2015 despite cheap energy, an export-boosting drop in the currency and monetary stimulus, it stated. The figure was in line with market expectations after earlier reports showed Germany, Europe's biggest economy, grew at the same 0.3 percent rate and France, the region's number 2, expanded by 0.2 percent, it mentioned. Over the whole of 2015, the Eurozone grew 1.5 percent, while that's the highest level since 2011, growth remains way below levels that would markedly reduce the region's unemployment rate, which is still above 10 percent, it said The UK's goods trade deficit narrowed to a three-month low in December, as imports fell sharply, official data showed on Tuesday, according to the report. The UK Office for National Statistics said the country's goods trade deficit fell to a seasonally adjusted 9.92 billion pounds from a deficit of 11.50 billion pounds in November, it said, indicating that economists had expected the goods trade deficit to narrow to 10.4 billion pounds in December. (end) mfs.abd.hm