Dollar Up, Comments From Fed’s Powell Cap Gains

© Reuters.
© Reuters.

By Gina Lee – The dollar was up on Friday morning in Asia, however Federal Reserve Chair Jerome Powell’s dovish comments that interest rates would not rise any time soon capped its gains.

The that tracks the greenback against a basket of other currencies inched up 0.06% to 90.267 by 11:31 AM ET (4:31 AM GMT). It was little changed after drifting slightly lower during the previous session.

The pair flat at 103.79, with the dollar little changed after slipping 0.1% against the yen overnight.

The pair edged down 0.16% to 0.7764, with the riskier AUD sliding 0.1% after gaining 0,6% during the previous session.

Across the Tasman Sea, the pair edged down 0.12% to 0.7201.

The pair inched down 0.09% to 6.4679 and the pair inched down 0.04% to 1.3681.

During a live-streamed interview with Princeton University, Powell said that the economy remains far from where the Fed wants it to be, and that he sees no reason to alter its highly accommodative stance “until the job is well and truly done.”

The Fed’s asset-buying program has also weighed on the dollar, as it increases supply of the currency and thus diminished its value.

“Shorter term, Powell just put a lid on the U.S. dollar,” said Westpac currency analyst Sean Callow.

“The baseline case is still for a substantial acceleration in the global economy, which historically has proven to be positive for most currencies against the U.S. dollar, but I think there is potential to at least have a debate over whether the U.S. dollar will be quite as weak as people expect.”

Biden released details of the $1.9 trillion “American Rescue Plan” on Thursday, which includes a wave of new spending, more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs.

However, questions have been raided over how he and his administration plan to foot the bill.

The dollar rebounded to as high as 90.73 at the start of the week from as low as 89.206 on Jan. 6. It continued a rally driven by the prospect of further stimulus, which weighed on U.S. government bonds and sent the benchmark above 1% for the first time since March 2020.

However, some investors are already predicting that the greenback will resume a decline that saw it slide almost 7% last year versus major peers as the global economy recovers from COVID-19, concerns are mounting that the rise in yields will temper that weakness.

continued its recovery after seeing a nearly $12,000 plunge from the record $42,000 reached during the previous week, and briefly topped the $40,000 mark overnight.

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