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FOREX-Dollar on back foot with Fed's Powell likely to sound dovish note

ForexJan 27, 2021 05:42
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© Reuters.

* Powell expected to reiterate it's too soon for taper talk
* Sterling touches highest since May 2018 amid dollar
weakness
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Kevin Buckland
TOKYO, Jan 27 (Reuters) - The dollar was stuck on the back
foot against major peers on Wednesday as markets wait on
comments from Federal Reserve Chair Jerome Powell, who is likely
to renew a commitment to ultra-easy policy. The greenback held declines against riskier currencies, with
pandemic recovery hopes getting a boost as the International
Monetary Fund upgraded its forecast for 2021 global growth.
Treasury yields, whose rise had supported the dollar at the
start of this year, declined overnight amid caution about the
eventual size of and potential delays to President Joe Biden's
$1.9 trillion fiscal stimulus plan. "The stronger the world economic outlook, the weaker the
U.S. dollar," said Joseph Capurso, currency analyst at
Commonwealth Bank of Australia in Sydney.
"Powell is going to make clear that they don't see any
near-term exit from their very easy policy stance, and that's
going to pull the dollar down."
The Fed chair is due to speak at a news conference after the
central bank's two-day policy meeting that ends Wednesday.
Earlier this month, he said in a web symposium with
Princeton University that the U.S. economy is still far from the
Fed's inflation and employment goals, and it is too early to
discuss altering monthly bond purchases. The dollar index =USD ticked up 0.1% to 90.253 on
Wednesday in Asia, following a 0.2% decline the previous
session.
The gauge has been consolidating since bouncing off a nearly
three-year low of 89.206 at the start of the month.
The British pound GBP= climbed to its highest since May
2018 at $1.3753 before trading slightly lower at $1.3724.
The Aussie dollar AUD= slipped 0.2% to 77.30 U.S. cents,
paring Tuesday's 0.5% rally.
Traders are also keenly watching progress on the U.S.
stimulus front after Senate Majority Leader Chuck Schumer said
Democrats may try to pass much of the President's massive
spending package with a majority vote, but it is not clear if
they have the numbers to override Republican objections.
"We've had a lot of speculation recently that the Biden
stimulus package won't be negative for the dollar at all, in
fact it will be a positive thing just on the basis that it
should lead to U.S. economic outperformance," said Kyle Rodda, a
markets analyst at IG Markets.
"But I think if you look at more of the trends in the market
at the moment, and we go back to the business cycle, we're
really only at the beginning of this uptick in the global
recovery, and a necessary ingredient of that is a weaker
dollar."
The greenback gained 0.1% to 103.72 yen JPY=EBS following
a similar-sized decline overnight.
The euro EUR=EBS was mostly flat at $1.2153 after rising
around 0.1% in the previous session.

========================================================
Currency bid prices at 1:26PM (426 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2156 $1.2160 -0.03% -0.51% +1.2170 +1.2154
Dollar/Yen JPY=D3 103.7070 103.6450 +0.09% +0.44% +103.7370 +103.6000
Euro/Yen EURJPY= 126.07 125.99 +0.06% -0.67% +126.1400 +126.0100
Dollar/Swiss CHF=EBS 0.8868 0.8869 +0.01% +0.25% +0.8870 +0.8864
Sterling/Dollar GBP=D3 1.3729 1.3735 -0.06% +0.48% +1.3750 +1.3724
Dollar/Canadian CAD=D3 1.2719 1.2695 +0.22% -0.09% +1.2723 +1.2688
Aussie/Dollar AUD=D3 0.7733 0.7748 -0.21% +0.51% +0.7762 +0.7730
NZ NZD=D3 0.7227 0.7239 -0.17% +0.64% +0.7243 +0.7225
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

FOREX-Dollar on back foot with Fed's Powell likely to sound dovish note
 

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