Title: Dollar Edges Lower After Powell's Comments Prompted Gains

Dec 01, 2021 03:14AM ET

By: AnalysisWatch

The dollar eased slightly on Wednesday, consolidating gains from the previous day after Federal Reserve Chairman Jerome Powell indicated that the US central bank is likely to accelerate the reduction of securities purchases.

At 2:55 AM ET (0755 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 95.970, having posted its biggest monthly gain since June in November on the notion that US policy rates will be raised sooner rather than later.

EUR/USD increased by 0.1% to 1.1337 after falling as low as 1.1258 on Tuesday, while USD/JPY increased by 0.2% to 113.37, GBP/USD increased by 0.2% to 1.3316, and the risk-sensitive AUD/USD increased by 0.4% to 0.7151, bouncing off a one-year low.

The key to the earlier dollar gains were Federal Reserve Chairman Jerome Powell's remarks to the Senate Banking Committee on Tuesday.

At its November meeting, the Fed said it would reduce bond purchases by $15 billion per month. Accelerating this process would probably bring forward the time when the central bank would dare to raise its key interest rates.

At its November meeting, the Fed said it would reduce bond purchases by $15 billion per month. Accelerating this process would probably bring forward the time when the central bank feels able to raise its key interest rates.