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  • Writer's pictureanalysiswatch

Title: Dollar Edges Lower as Investors Weigh Powell Testimony

Jun 24, 2022 02:46AM ET

By: AnalysisWatch

The US dollar fell slightly on Friday as investors remained cautious about the impact of tighter central bank policies around the world aimed at curbing rising inflation.

As of 2:35 a.m. EDT, the U.S. dollar index, which tracks the greenback's exchange rate against a basket of six currencies, fell marginally 0.16 percent to 104.27.

The index is trading below a two-year high of 105.79, reached on June 15 after the Federal Reserve raised interest rates by 75 basis points.

The dollar has fallen from that high on concerns that such aggressive monetary tightening could eventually trigger a recession.

Fed Chairman Jerome Powell warned in testimony on Capitol Hill earlier this week that while he does not intend to trigger a broader slowdown, "it is certainly a possibility," despite his confidence that the U.S. economy will be able to withstand a sharp rise in borrowing costs.

On Thursday, Powell added that the Fed has an "unconditional" commitment to fight inflation.

The yield on the 10-year U.S. Treasury note fell to 3.087 percent after Powell's comments.

Meanwhile, GBP/USD remained steady, rising slightly by 0.05% to USD1.22 after Friday's data showed that UK retail sales volume declined by 0.5% in May, but exceeded analysts' estimates.

In other news, the EUR/USD rose 0.19% to USD1.05 ahead of European Central Bank speakers' statements later today and German business confidence data.

The USD/JPY fell 0.11% to trade at 134.79 after Japanese inflation exceeded the Bank of Japan's 2% target, casting doubt on the bank's loose monetary policy stance.

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