NEW YORK, January 11 – The US dollar hovered near the midpoint of its recent range against its major peers today, as traders look to the appointment hearing of outgoing Fed Chairman Jerome Powell later through the day for further clues on the timing and pace of policy normalization.
In his prepared opening remarks, released yesterday, Powell will pledge to prevent high inflation from becoming “entrenched,” but will make no mention of plans for the monetary policy path.
However, he will answer senators’ questions in his candidacy for a second four-year term.
The dollar index, which measures the currency against six peers, hovered around 95.93 at the start of the Asian session.
It peaked over 16 months at 96.938 on November 24 amid increasing aggression from Fed policymakers, but has since stuck between that level and 95.544, hit less than a week later. , despite a continued surge in rhetoric that now has Wall Street banks forecasting four quarter-point rate hikes this year.
TD Securities strategists said it appeared the Fed was advising “sooner rather than later” for the higher rates and going out of balance after ending the bond buying stimulus – a process called quantitative tightening (QT).
“The claim of tightening in March and early QT should support the dollar’s overall strength, albeit within well-established ranges,” they wrote in a research note.
TD expects a first hike in June, but as early as March was also a possibility.
Money markets are forecasting an increase by May, with two more by November.
US consumer inflation data for December is expected to be released tomorrow, with a headline CPI estimated at 7% year-on-year, strengthening the case for a rapid rise in interest rates.
The dollar was little changed at 115.23 (RM 4.19) after rebounding from a weeklong low of 115.045 overnight.
The euro was roughly stable at US $ 1.13325, stuck in the middle of its trading range since mid-November.
The British pound was flat at US $ 1.35825 after declining from yesterday’s two-month high of US $ 1.36025.
The Australian dollar rose 0.17% to US $ 0.71860, supported by local retail sales data which is well above economists’ forecasts. Reuters