Title: Dollar Edges Lower After Powell Promises Inflation Won't Become "Entrenched"
Jan 11, 2022 03:10AM ET
The US dollar eased in early European trade on Tuesday but remained in a narrow trading range as traders waited for Federal Reserve Chairman Jerome Powell's appearance in Congress later in the session for clues on when the central bank will start raising interest rates.
In his opening remarks for the hearing, released in advance, Powell pledged to prevent high inflation from "taking hold" but gave no indication of the timing or pace of the central bank's monetary tightening.
Powell's answers to senators' questions during his confirmation hearing for a second four-year term as Fed chief could not be more revealing.
At 2:55 a.m. ET (0755 GMT), the dollar index, which measures the value of the US currency against a basket of six other currencies, was 0.2 percent lower at 95.843.
The index had hit its highest level in more than 16 months at 96.938 on November 24, when the release of minutes from a Fed meeting suggested central bankers would adopt a hawkish stance, but has since fluctuated between that level and 95.544, reached less than a week later.
The USD/JPY rose to 115.22 after hitting a one-week low of 115.04 on Monday. The EUR/USD rose 0.2% to 1.1344, while the risk-sensitive AUD/USD climbed 0.3% to 0.7188.
The US Federal Reserve (Fed) has taken a hawkish stance in December, suggesting inflation was a bigger problem than previously thought and announcing plans to tighten monetary policy faster than expected.
However, that was before the Omicron variant spread rapidly, and this week's hearings were the first opportunity for Powell to show whether this outburst has changed his thinking.