Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Up, Takes “Wee Breath” Ahead of Powell’s Congress Testimony

ForexJun 22, 2021 06:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Gina Lee – The dollar was up on Tuesday morning in Asia. The greenback hit pause as investors await testimony from U.S. Federal Reserve Chairman Jerome Powell after being caught off-guard by the central bank’s latest policy decision.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 91.922 by 12 AM ET (4 AM GMT).

The USD/JPY pair edged up 0.11% to 110.42.

The AUD/USD pair was down 0.26% to 0.7515 and the NZD/USD pair edged down 0.14% to 0.6976.

The USD/CNY pair inched down 0.02% to 6.4645.

The GBP/USD pair inched down 0.10% to 1.3914. Investors await a further re-opening of the U.K. economy on Jul. 19 as well as a Bank of England policy decision, to be handed down on Thursday.

The U.S. currency has climbed sharply ever since the previous week’s Fed decision, which hinted that interest rate hikes and asset tapering could come sooner than expected. It gave up some of those gains on Monday as it dipped, however.

"We've had a meaningful shift at the Fed from a longtime dovish stance to now a slightly hawkish one... we've had a bit of a positioning cleanout, the whole world was mega short the dollar and that's in good part probably been cleaned out already, and now we take a wee breath before the next move up," Westpac currency analyst Imre Speizer told Reuters.

Investors will now focus on the U.S. labor market, whose performance will likely influence the Fed’s next moves. They also await Powell’s testimony before a House of Representatives subcommittee hearing later in the day.

However, Powell noted sustained labor market improvement and the recent increase in inflation in written remarks ahead of his testimony.

Other Fed officials, including St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan, also offered toned-down rhetoric. However, New York Fed President John Williams (NYSE:WMB) warned it was too soon to shift policy as he expects inflation to ease from about 3% in 2021 to around 2% in 2022 and 2023.

Some investors were unsure of Williams’ prediction, however.

"The Fed is nearly always late on such things," with core inflation potentially higher at just under 3% by the end of 2022. "That is not 2% inflation,” with the Fed eventually feeling the pressure to move on interest rates, RBC Capital Markets chief economist Tom Porcelli said in a note.

"In the meantime, we have no doubt with that 2% forecast as cover, Powell will attempt to play down the likelihood of a rate hike in 2022. But just as he eventually relented on taper talk, he will relent on dismissing talk about hiking rates too. Just give it more time,” the note added.

In cryptocurrencies, bitcoin and its rivals slumped on Monday in reaction to an intensifying crackdown on trading and mining in China in addition to technical factors.

"The tides of FONGO, or fear of not getting out, are creeping in," Pepperstone head of research Chris Weston told Reuters.

"Bitcoin is also at a make-or-break point” as it tests May's low of near $30,000. "Ethereum looks plain ugly and if crypto is an emotive asset, then one would have to be the staunchest of hodlers to be holding this and not look for some sort of hedge," he added.

Dollar Up, Takes “Wee Breath” Ahead of Powell’s Congress Testimony

Related Articles

Dollar Slips After Powell's Dovish Tapering Comments
Dollar Slips After Powell's Dovish Tapering Comments By - Jul 29, 2021

By Peter Nurse - The dollar weakened in early European trading Thursday, falling to two-week lows after further indications that U.S. interest rate hikes are still a...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email