Yahoo Finance Dollar Steadies Ahead of Powell’s Testimony
Investing.com – The dollar was little changed on Tuesday as investors awaited further clues on monetary policy when Federal Reserve Chairman Jerome Powell testify on the economy and monetary policy later in the day.
The U.S. Dollar Index that tracks the dollar against a basket of six major currencies slipped 0.01% at 94.26 by 1:44AM ET (05:44 GMT). Powell will testify before the U.S. Senate Banking Committee at 10:00AM ET (14:00 GMT) on Tuesday, followed by a testimony at the same time on Wednesday to the House of Representatives Financial Services Committee.
Ahead of Powell’s appearance, the Fed gave a positive assessment of the U.S. economy, insisting that strong labor markets and inflation would support the central bank’s plan to continue with gradual rate hikes.
Analysts and many of Powell’s colleagues expect two more interest rate increases this year amid a continued economic expansion. The U.S. Commerce Department revealed on Monday that the country’s retail sales increased by 0.5% for the fifth month in a row, further supporting expectations of a Fed interest rate increase.
“In short, we expect the chairman to signal optimism on growth and inflation, consistent with continued ‘gradual’ tightening,” wrote Jim O’Sullivan, chief economist at High Frequency Economics.
“He will undoubtedly acknowledge some downside risks associated with the administration’s trade warmongering, but he will likely try to avoid sounding critical of the administration.”
Elsewhere, the AUD/USD pair rose 0.19% to 0.7434, while the USD/JPY pair gained 0.11% to 112.42.
“It seems that the dollar-yen is kind of immune to the Chinese risk at the moment,” said Mizuho Securities' chief currency strategist Masafumi Yamamoto. “But there is a risk that if the Shanghai Composite remains weak and the renminbi keeps depreciating, it will cap the Australian dollar’s top side,” he said.
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