Title: Dollar gains on growth fears ahead of Fed chair's remarks

Jun 22, 2022 01:45AM ET

By: AnalysisWatch

The dollar, considered a safe haven, gained ground against most other currencies on Wednesday as investors again fretted about the global growth outlook, while the yen hit a fresh 24-year low as high bond yields in the U.S. and Europe contrasted with low Japanese interest rates.

The euro fell 0.3% to $1.0493 and sterling slipped 0.4% to $1.2228 ahead of U.K. consumer price data as investors turned to the dollar in a move away from riskier assets, which also stalled the stock market rally.

An elevated consumer price index would increase pressure on the Bank of England to raise interest rates further as the U.K., like most developed countries, struggles with sky-high inflation.

The other major event on Wednesday is the start of Federal Reserve Chairman Jerome Powell's two-day hearing before Congress, where investors will be looking for more clues on whether another 75 basis point rate hike will be on the agenda at the Fed's July meeting.

The dollar index was 0.3% higher at 104.7.

The yen was last at 136.1 per dollar, firmer after hitting 136.71 in early trade, its lowest level since October 1998.

Analysts see no immediate end to the sell-off, which has seen the yen fall 18% year to date from 115.08 at year-end 2021.

The Japanese currency has weakened as higher energy prices weigh on Japan's current account and the gap between Japanese government bond yields and U.S. Treasury yields widens.

The Australian dollar fell 0.7% to $0.6919 as low commodity prices, such as iron ore, continued to weigh and also lost ground amid risk-off sentiment.