The dollar has been climbing up ever since Powell’s testimony
Investing.com – The dollar and the yen made gains, while the Aussie weakened as developments in the U.S., Japan and China rocked the currency market in Asia on Wednesday morning.
The dollar has been climbing up ever since Powell’s testimony at the Congress strengthened the Fed’s position in further interest rate hikes this year.
The , which measures the greenback against a basket of six major currencies, rose to a three-week high at 90.39 at 9:30pm ET, up 0.08%, breaking the 90 handle.
Federal Reserve’s new head Jerome Powell delivered an at the Congress on Tuesday, acknowledging that the US economy had strengthened recently and the employment market would continue to look bullish. The first rate hike, out of the three expected hikes, is expected in March when the Fed has its next policy meeting. Investors are betting on a fourth rate hike this year.
Powell also noted that when formulating the monetary policy, the Fed would strike a balance between avoiding the market from overheating while achieving the 2 percent inflation target rate.
Despite the bullish US dollar index, the pair turned red, trading 0.10% lower at 107.22, after The Bank of Japan announced the decision to cut the purchases of Japanese government bonds (JGBs) with 25-40 years to 70 billion yen, compared to 80 million yen the Bank purchase on Friday. The reduction was cited as a tailwind for the yen.
The Aussie traded against the dollar at 0.05% higher to 0.7793, but quoted 0.04% lower to 83.57 against the yen. The sentiment-sensitive Aussie was dragged down by the disappointing Chinese PMI data this morning. Both the and PMIs failed to meet analyst expectations, with the former recording 50.3 versus the previous 51.3 and the later 54.4 from the previous 55.3. The decline in Australia’s largest trading partner prompted traders to sell the Aussie.
Elsewhere, the PBOC set the fix rate against the dollar at 6.3294 versus yesterday’s rate of 6.3146. The pair was quoted at 6.3281, up 0.21%.
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