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Title: Dollar Down as Recession Fears Continue to Mount

Jun 23, 2022 01:11AM ET

By: AnalysisWatch

The dollar fell on Thursday morning in Asia amid growing concerns about slowing economic growth after the hawkish testimony of the US Federal Reserve chairman.

The US dollar index, which measures the value of the greenback against a basket of other currencies, was down 0.07 percent at 104.13 as of 1:08 p.m. EDT.

The USD/JPY exchange rate fell 0.58 percent to 135.48.

The Australian dollar fell 0.49 percent to 0.6892, while the New Zealand dollar fell 0.18 percent to 0.6261.

The USD/CNY pair rose 0.15% to 6.7124 and the GBP/USD pair fell 0.10% to 1.2254.

Investors are worried that the Fed's commitment to taming excessively high inflation could trigger a recession, sending 10-year Treasury yields to a near two-week low.

In testimony before the Senate on Wednesday, U.S. Federal Reserve Chairman Jerome Powell said aggressively raising interest rates could cause the economy to contract, and in his testimony, he called the soft landing "very challenging."

Powell also said he was not ruling out a 100 basis point increase in interest rates, adding that the central bank would take whatever steps were necessary to restore price stability.

But with 75 bps still on the table for July and Fed Funds set to rise above 3% by year-end, support for US dollar interest rates should eventually continue to increase.

On the data front, initial US jobless claims are due on Thursday and the University of Michigan consumer sentiment is due on Friday.

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