Dollar near 3-week low
On Thursday, the US dollar hovered near a three-week low against key peers after Federal Reserve Chair Jerome Powell assuaged trading concerns about further aggressive monetary tightening.
The dollar index, which compares the greenback to six other currencies, fell overnight after the Fed hiked the benchmark rate by 75 basis points, as predicted, to bring it closer to neutral while noting that the job market remains strong, other economic indicators have weakened.
Powell stated that “another unusually big” rate hike could be warranted at the Fed’s next meeting but that the central bank’s choices would be data-dependent and that no forward guidance would be provided. He also stated that based on the strength of employment, he does not believe the economy is in recession.
The two-year Treasury yield, particularly sensitive to policy expectations, has slid near its lowest level this week, at 2.9878 percent, adding to the dollar’s woes.
However, it remained approximately 23 basis points above the 10-year yield, usually interpreted as indicating a looming decline.
The announcement of GDP numbers later on Thursday will reveal whether the US economy has entered a technical recession after two consecutive quarters of contraction, which will be the market’s next big focus.
Currencies
After falling 0.59 percent overnight, the dollar index was slightly higher at 106.54 in early Asian trading. The lowest level since July 5 would be 106.1.
The euro fell 0.08 percent to $1.0191 after rising 0.82 percent overnight.
Sterling fell 0.9% to $1.2146 after rising 1.06 percent on Wednesday.
Bitcoin fell 0.58 percent to $22,836.57, giving back some of the previous session’s more than 8 percent gain.
The yen soared against key rivals on Thursday as weaker expectations for rate hikes prompted hedge funds to cover short bets in one of the year’s largest global macro moves.
The yen rose more than 1% in early trading to 135.11 per dollar, extending an overnight advance to a three-week high. It increased by a similar amount compared to the euro and the Australian dollar.
