Dollar Steadies Amidst Fed Chair Powell’s Hawkish Rendition
United States (US) dollar trades steadied against other major currencies following Federal Reserve Chair Jerome Powell’s testimony on Wednesday. The dollar rose 0.09% to 137.28 yen USDJPY, after earlier reaching 137.90, the highest since Dec. 15.
However, analysts said the index is up from a nine-month low of 100.80 on Feb. 1 but remains well below a 20-year high of 114.78 reached on Sept. 28. Fed Chairman Powell didn’t deliver any surprises today, Edward Moya at Oanda says in a note.
In his second day on Capitol Hill, Powell repeated his hawkish message that key interest rates would likely be raised potentially faster than previously anticipated, but stressed the central bank’s policy decisions remain data dependent.
“The Fed will remain data-dependent and right now you can make a strong argument that the Fed needs to take rates to 6.00%,” the senior market analyst, Americas, says.
Today’s ADP employment report suggests a tight labour market, but higher rates may be pressuring small businesses, which lost jobs.
“Construction and professional/business services lost jobs, which doesn’t bode well for a quick labour market slowdown.”
Financial markets have priced in an 80.8% likelihood of a 50 basis point hike to the key interest rate at the conclusion of the Fed’s March meeting, up from about 30% at the beginning of the week, according to CME’s FedWatch tool.
Sterling GBPUSD gained 0.09% to $1.1840, after earlier falling to $1.1805, the lowest since Nov. 21. The Aussie AUDUSD was up 0.07% at $0.6588, after reaching $0.6568 earlier, the lowest since Nov. 10.
The dollar index (DXY) was last unchanged on the day against a basket of currencies at 105.63, after earlier reaching 105.88, the highest since Dec. 1. #Dollar Steadies over Fed Chair Powell’s Hawkish Rendition.
