Futures Turn Positive After Fed Chief Powell's Remarks

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Stocks slipped on Wednesday ahead of Jerome Powell's testimony in front of Congress, as traders anxious the Federal Reserve's chief might signal the central bank won't cut interest rates this month as expected.

Gold was down 0.4% at $1,396.

Futures for the Dow Jones Industrial Average dropped 60 points to 26,726.00, while the Standard & Poor's 500 index futures fell 6.6 points to 2,976.00.

Japan's Nikkei had also finished lower and Chinese blue chips barely budged as data showed inflation remained subdued.

The euro held near a three-week low against the dollar on Wednesday as investors trimmed expectations of aggressive rate cuts from the U.S. Federal Reserve later this month, pushing U.S. Treasury yields and the greenback higher.

Futures are still fully priced for a 25-basis-point cut at the Fed's July 30-31 meeting, but have abandoned wagers on a half-point move.

TOKYO, July 10 (Reuters) - The dollar neared a three-week high against a basket of major currencies on Wednesday as investors continued to unwind bets on deep USA interest rate cuts, pushing Treasury yields higher.

"I think the market seems to be veering towards a less dovish message from Powell than was the prevalent a couple of weeks ago", said Bank of New York Mellon senior strategist Neil Mellor.

His appearances come at a particularly sensitive time for both the Fed and Powell personally, with President Donald Trump lashing out at his handpicked Fed chief for not cutting interest rates that, in Trump's view, are needlessly slowing the economy.

"The real interest is what happens thereafter", Mellor said.

Gold prices eased in global markets as the US dollar climbed higher on expectations of a less dovish US Federal Reserve.

Though the threatened tariffs on Mexico never materialized and China and the United States have agreed to resume talks to reach a trade deal, that "did little to alleviate the uncertainty that Fed officials believe is contributing to cooling momentum in global trade and domestic capex plans", Deutsche Bank's US economics team wrote this week.

Powell says trade uncertainty and global growth concerns weigh on USA economy.

The benchmark S&P 500 lost 0.5 per cent to 2,976.

The cooling in US rate fever has seen bonds give back just a little of their rally.

Major stock indexes in Europe headed lower.

The dollar was higher against the Japanese yen, with USD/JPY rising 0.1% to 108.83.

The Mexican peso began to recover after sliding on Tuesday when Finance Minister Carlos Urzua suddenly resigned, citing "extremism" in economic policy.

Oil prices rose on Middle East tensions and news that US stockpiles fell for a fourth week in a row.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22 per cent to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday.

Oil prices traded higher as Brent crude futures rose 2.2% to trade at $65.56 per barrel, while US WTI crude futures rose 2.2% to trade at $59.12 a barrel.

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