Dollar Edges Higher Ahead of Powell’s Testimony
The dollar inched up against most Group-of-10 peers as traders waited for Federal Reserve Chairman Jerome Powell’s semiannual congressional testimony to assess the central bank’s policy path. The Canadian dollar underperformed.
The Bloomberg Dollar Spot Index was up 0.1%. The loonie underperformed peers after US President Donald Trump imposed 25% levies on steel and aluminum imports, including from Mexico and Canada, the US’s top two foreign suppliers of the metals.
Traders are now awaiting Powell’s testimony where lawmakers are likely to prod him on everything from Trump’s trade policies to immigration and regulation due to their impact on US economic outlook and the Fed’s path. So far, markets are fully pricing just one rate cut this year in September with officials, including Powell, cautious on the need for more policy easing.
“Powell may continue to sound a tad hawkish on inflation and support the US dollar,” said Fiona Lim, a senior strategist at Malayan Banking Bhd in Singapore. The dollar is also being aided by “the announcements of tariffs, although we note that reactions have been more subdued of late which could mean that markets are running into tariff-fatigue,” she said.
USD/CAD rose 0.1% to 1.4335.
The new US levies, which also included finished metal products, will go into effect on March 4, according to a US official.
AUD/USD edged 0.1% lower to 0.6273.
Trump said he is considering giving Australia an exemption on the steel and aluminum duties.
“If steel tariffs result in reduced demand for steel making inputs, then in itself that is a negative for Australia and the Aussie dollar regardless of whether Australia secures an exemption from direct tariffs on its steel and aluminum exports,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
GBP/USD inched 0.1% lower to 1.2361.
Bank of England voting member Catherine Mann told the Financial Times demand conditions are quite a bit weaker than before, which means further easing could be needed as fragile pricing power filters through into lower inflation.
USD/JPY little changed at 152.
Source : Bloomberg
