Dollar Consolidates Ahead of Powell's Testimony
The dollar was steady 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 little changed. The loonie fell the most among 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 the US economic outlook and the Fed's path. So far, markets are fully priced just one rate cut this year in September with officials, including Powell, cautiously on the need for more policy easing
“Powell may continue to sound a tad hawkish on inflation and supporting 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 1.4333 The new tariffs from Trump will go into effect on March 12, at 12:01am Washington time, according to a pair of proclamations issued by the White House late Monday
AUD/USD slipped 0.1% to 0.6274 Trump said he is considering giving Australia an exemption on the steel and aluminum duties
The tariffs “which ironically fall most on US allies rather than ‘foes’ could possibly see Australia win an exemption, but in the fluid world we now live in, there are no certainties for long term economic and diplomatic partners,” Westpac Banking Corp strategists led by Martin Whetton wrote in a note to clients
GBP/USD inched 0.1% lower to 1.2360 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 steady at 151.97
Source: Bloomberg
