As the Federal Reserve Chairman Jerome Powell’s regular testimony in Congress is coming near, the US dollar stays unchanged in early European trading Thursday. The USD fell to a six-week low not long ago due to the anticipated speech.
At 3:55 A.M. ET, the USD index, which monitors the currency against the basket of 6 other currencies, increased by 0.01 percent to 90.002.
EURUSD increased by 0.2 percent to 1.2174, USDJPY by 0.1 percent to 105.14, while the risk-wary AUDUSD increased by 0.1 percent to 0.7917, rising to the biggest level in nearly 3 years as commodity prices rose.
These profits have given rise to concerns about a worldwide jump in inflation, and have focused on Powell, who is to testify to Congress later that day.
People expect him to assure those present that the Fed won’t answer bigger inflation with rate hikes, which may lead to the dollar dropping even more. He has quite a challenge in front of him – assure us that a recovery is underway, but he must not come off as too confident, since this may push the bond marketplace on a wayward path. The Fed usually knows how to strike a balanced toned in such occasions. One can expect Powell will downplay the upcoming inflation growth in the second quarter.
Moving on, the GBPUSD increased by 0.2 percent to 1.4083, up nearly 3 percent in February as the United Kingdom wowed with its corona vaccination program, which in turn boosted confidence in the country’s turnaround.
Its UK unemployment rate has risen to 5.1 percent in the final 3 months of last year, the biggest since Q1 2016, according to official data on Tuesday. That said, separate data from the Office for National Statistics revealed that the number of workers on firm payrolls increased by 83k in January, as compared to December.
On Monday, PM Boris Johnson laid out the goal of relaxing the lockdown guidelines in a phased manner during the following 4 months.
The shift from Brexit-induced instability to vaccine rollout to United Kingdom growth outlook argues for more frequent periods of British pound valuation overshoots.