Dollar Steadies After Powell’s Testimony; Sterling Awaits BOE MeetingAdministrator_India | June 22, 2023 | 0 | ECONOMIC NEWS
The U.S. dollar stabilized in early European trade Thursday near a one-month low after the first day of Federal Reserve Chair Jerome Powell’s semi-annual testimony to Congress, while sterling edges lower ahead of the latest Bank of England meeting. At 01:50 ET (05:50 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged higher to 101.707, trading just above its recent one-month low. Mixed messages from the Fed Federal Reserve Chair Jerome Powell appeared before the House Financial Services Committee of Congress on Wednesday. This was the first day of his two-day semi-annual testimony, and he stayed on message, stating further U.S. rate increases are “a pretty good guess” if the economy continues in its current direction. However, he declined to commit to a rate hike in July, like some had expected, while his stance was contradicted by other Fed members calling for an extended pause in the central bank’s rate hike cycle. “My baseline is that we should stay at this level for the rest of the year,” said Atlanta Federal Reserve President Raphael Bostic, in a published essay earlier in the day. “If we simply press on with additional rate hikes, we could needlessly drain too much momentum from the economy.”
Powell Is Set To Speak Again Later Thursday.
this time to the Senate Banking Committee. Sterling edges lower ahead of BOE meeting Elsewhere, GBP/USD fell 0.1% to 1.2756, not far from last week’s one-year high of 1.2849, ahead of the latest policy-setting meeting of the Bank of England. The U.K. central bank is widely expected to raise interest rates for a 13th time in a row later Thursday, but the chances of a hefty 50-basis-point hike were lifted after the country’s May headline inflation index held at 8.7% on Wednesday, the highest of any major economy. ECB must remain “stubborn” EUR/USD edged lower to 1.0988, not far removed from the recent one-month high, with European Central Bank officials maintaining a hawkish stance even after the central bank lifted interest rates last week. “Inflation to me is like a greedy beast and we do have to fight against this very greedy beast,” Bundesbank chief Joachim Nagel told a conference. “As inflation fighters we have to be very stubborn because inflation is so stubborn.” Elsewhere, the risk-sensitive AUD/USD fell 0.5% to 0.6762, with the Aussie dollar coming under pressure from uncertainty over Chinese stimulus measures and commodity demand. USD/JPY dropped 0.1% to 141.75, with the Japanese yen trading close to six-month lows as the Bank of Japan maintains a loose monetary policy, while USD/CNY traded flat at 7.1795, with the Chinese yuan hovering close to six-month lows.