Updated July 11, 2019 09:57:01

Photo: Fed chair Jerome Powell 'fully intends' to serve out his term even if Mr Trump tries to sack him. (AP: Susan Walsh)

Wall Street climbed to a record high on strong expectations the US Federal Reserve will soon cut interest rates for the first time in a decade.

Meanwhile, the Australian dollar has risen to 69.6 US cents due to a weaker greenback.

The US dollar fell after Fed chair Jerome Powell gave a downbeat outlook for the US economy in his closely-watched testimony on monetary policy to Congress.

The central banker's comments boosted US markets, with the benchmark S&P 500 index rising 0.5 per cent to 2,993 — though it briefly hit 3,000 points at its peak.

The Dow Jones index lifted 0.3 per cent to 26,820.

However, the tech-heavy Nasdaq was the best performer, up 0.75 per cent, thanks to strong gains from Amazon (+1.5pc), Microsoft (+1pc) and Apple (+1pc) shares.

In addition, spot gold jumped to $US1,418.80 per ounce on the back of a weaker US dollar.

What did Powell say?

The US central bank's chief said "broad" global weakness was clouding the US economic outlook amid uncertainty about the fallout from the Trump administration's trade conflicts with China and other nations.

Economists argue the Reserve Bank must consider quantitative easing, but what is it?

Although the US Government reported strong jobs growth in June, other major economies' "data have continued to disappoint ... across Europe and around Asia, and that continues to weigh," Mr Powell said.

"Manufacturing, trade and investment are weak all around the world ... We have agreed to begin (trade) discussions again with China, and that is a constructive step. It doesn't remove the uncertainty."

Despite the currently low US unemployment rate, he said inflation remains "muted" and wage growth is modest.

"We don't have any evidence for calling this a hot labour market," Mr Powell told lawmakers in Washington.

"To call something hot we need to see some heat."

Mr Powell's semi-annual congressional testimony occurred against the backdrop of US President Donald Trump's frequent criticism of the Fed — and his demands that the Fed cut interest rates.

The Fed chairman was asked by Representative Maxine Waters, who chairs the committee, if he would "pack up and leave" if the President demanded it.

He replied with a curt "no ma'am ... The law clearly gives me a four-year term and I fully intend to serve it".

The Fed, which hiked rates four times last year, has kept its current benchmark overnight interest rate in a range of between 2.25 and 2.50 per cent since December.

Since a series of Trump trade-related tweets in late May, both investors and the Fed have begun shifting their stance.

Traders are expecting a cut of at least 0.25 percentage points when the Fed concludes its next policy meeting on July 31.

ABC/Reuters

Topics: stockmarket, markets, currency, business-economics-and-finance, united-states, australia

First posted July 11, 2019 07:56:43