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Dollar slips as Powell’s testimony offers little surprise.

The dollar languished near a one-month low against a basket of currencies on Thursday, after Federal Reserve Chair Jerome Powell stuck to his usual messaging at his semi-annual testimony, offering little room for surprise.

In remarks to lawmakers on Capitol Hill on Wednesday, Powell said further U.S. rate increases are “a pretty good guess” of where the Fed is heading if the economy continues in its current direction. Those comments were in line with what the central bank said at its policy meeting last week.

That sent the greenback down 0.1% against a basket of six major peers in the previous session. The U.S. dollar index last stood at 101.95.

The euro rose to a more than one-month high of $1.09925, extending Wednesday’s 0.65% jump.

“Markets had priced a lot of hawkishness from Powell prior to his testimony, so his comments didn’t really surprise too much on the hawkish end,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“At this stage, (markets) are not convinced that the FOMC can do two more rate hikes this year.”

Against the Japanese yen, the dollar slipped 0.06% to 141.82, having touched a seven-month peak of 142.37 yen in the previous session.

The Japanese currency has come under renewed pressure as the Bank of Japan continues to stick to its ultra-dovish stance. BOJ board member Seiji Adachi on Wednesday signaled a small chance for a July policy tweak.

Waiting for stimulus

In Asia, the Chinese offshore yuan languished near Wednesday’s seven-month trough and last bought 7.1798 per dollar, as traders remained on the lookout for greater support measures from Beijing to revive China’s faltering economic recovery.

“Until we get the confirmation on a stimulus package, (the yuan) will likely remain under downward pressure because of the soft outlook for the Chinese economy and that will in turn likely be a headwind for the Aussie as well,” said CBA’s Kong.

Source: CNBC



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