Title: Dollar Edges Lower, But Remains Near 20-Year High
May 13, 2022 03:14AM ET
The US dollar eased slightly in early European trade on Friday but remained near a 20-year high after Federal Reserve Chairman Jerome Powell broadly cemented the likelihood of more hefty rate hikes to combat stubbornly high US inflation.
At 3:15 AM ET (0715 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.2 percent at 104.645, just shy of its two-decade high of 104.92.
The dollar has been in demand for much of the year as the Federal Reserve is seen as one of the world's most aggressive central banks when it comes to fighting rising inflation.
The US central bank last week raised its benchmark overnight lending rate by 50 basis points, the biggest increase in 22 years, and is expected to continue aggressively tightening monetary policy in the coming months.
However, he added that the Fed was not actively considering another 75 basis point hike, prompting some traders to scale back their long dollar positions.
USD/JPY rose 0.2% to 128.58, rebounding after falling to a two-week low of 127.50 overnight, as the yen gained some support as the benchmark US 10-year yield continued to decline from Monday's high of 3.203%.
EUR/USD rose 0.2% to 1.0398, still not far from its 2017 low of 1.0340, the breach of which would take the pair to its lowest level in almost 20 years.
The weakness comes despite ECB President Christine Lagarde joining the chorus of policymakers calling for the central bank to raise interest rates on Thursday and is expected to take action in July.
In addition, GBP/USD rose 0.1% to 1.2209, recovering slightly after falling to a near two-year low in the previous session after data showed the UK economy grew less than expected in the first quarter.
USD/CNY rose 0.2% to 6.7989, with the yuan coming under pressure after several more COVID-19 cases were reported in Beijing, prompting authorities to deny speculation of a lockdown in the capital.