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Four thousand US dollars are counted by a banker counting change at a bank in Westminster, Colorado on November 3, 2009. REUTERS / Rick Wilking / File Photo
Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E
SINGAPORE, June 22 (Reuters) – The dollar paused on Tuesday as traders turned to testimony from Federal Reserve Chairman Jerome Powell for more information on the recent unexpected central bank change in its policy outlook, while support fell for cryptocurrencies.
The greenback has risen sharply since the Fed signaled earlier-than-expected interest rate hikes last week, although it dipped on Monday to restore some of that rise.
Against the euro, the dollar suffered an overnight loss of around 0.4% to stabilize around $ 1.1909. It climbed to 110.40 yen and the dollar index held steady at 91.935 after falling around 0.5% on Monday.
The Australian and New Zealand dollars eased – after Monday’s rebound from multi-month lows – with the Aussie down 0.3% to $ 0.7520 and the Kiwi down 0.15 % to $ 0.6978.
“We have had a significant change (at the Fed) from a long-standing accommodative stance to now a slightly hawkish stance,” Westpac currency analyst Imre Speizer said.
“We had a bit of positioning cleanup,” he added.
“The whole world was very short against the US dollar, and that has probably already been largely cleaned up, and now we’re taking a deep breath before the next hike,” he said.
In the medium term, investors will be heavily concentrated on the US labor market, the performance of which is likely to influence the attitude of the Fed. For the foreseeable future, all eyes will be on Powell who appears before Congress starting at 6:00 p.m. GMT.
In his prepared remarks, he noted the continued improvement in the labor market and the recent increase in inflation. Read more
On Monday, hawkish Fed officials such as St. Louis Fed Chairman James Bullard and Dallas Fed Chairman Robert Kaplan stressed the risks of acting too slowly. Read more
However, New York Fed Chairman John Williams said it was too early to change policy and expected inflation to drop from around 3% this year to close to 2% in 2022 and 2023, which will not leave the markets wiser.
“The Fed is almost always behind on such things,” said RBC Capital Markets chief economist Tom Porcelli, who believes core inflation could be higher – just under 3% – by the end of 2022.
“It’s not 2% inflation,” he said in a note, adding that this would end up pressuring the Fed to change rates.
“In the meantime, we have no doubts with this 2% forecast as a hedge, Powell will try to minimize the likelihood of a rate hike next year. But just as he has finally given in to the tapering discourse, he will stop dismissing the rate hike talk too. Just give it more time. “
Also on Tuesday, Fed member Loretta Mester is scheduled to deliver speeches.
Elsewhere, the pound has stabilized at $ 1.3910, holding on to its overnight rebound as investors anxiously await the UK economy to reopen on July 19.
Bitcoin and other cryptocurrencies found something after collapsing on Monday when a tougher crackdown on China’s trading and mining, along with technical factors, hit the asset class. Read more
On Tuesday they held above May lows, with bitcoin at $ 32,929, but the mood remained fragile.
“The tides of FONGO (Fear of Not Getting Out) are creeping in,” said Chris Weston, head of research at brokerage Pepperstone.
“Bitcoin is also at a starting or stopping point,” he said, as he tests May’s low at nearly $ 30,000.
“Ethereum looks downright ugly and if crypto is an emotional asset then you would have to be the most fervent of the HODLers to own it and not look for some sort of cover,” he added, using slang. of the cryto-market for bullish investors.
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Price of currency offers at 455 GMT
All spots
Tokyo spots
Points of Europe
Volatilities
BOJ Tokyo Forex Market Information
Reporting by Tom Westbrook; edited by Richard Pullin & Shri Navaratnam
Our Standards: The Thomson Reuters Trust Principles.
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