Home Forex News Dollar edges lower ahead of key Powell speech; Australian dollar soars

Dollar edges lower ahead of key Powell speech; Australian dollar soars


Dollar edges lower ahead of key Powell speech; Australian dollar soars By Investing.com

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Currencies 48 minutes ago (Feb 07, 2023 03:01AM ET)

(C) Reuters.

By Peter Nurse

Investing.com – The U.S. dollar slipped lower in early European trade Tuesday, consolidating after recent gains ahead of a key speech from Fed Chair Jerome Powell, while the Australian dollar surged after the Reserve Bank hiked interest rates.

At 03:00 ET (08:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.445, just off its recent one-month high.

The index is pausing for breath after its rally in the wake of Friday’s strong employment report, which prompted traders to raise their forecasts of how high Federal Reserve interest rate levels will need to rise in order to tame inflation.

Attention is now turning to a speech by Federal Reserve Chairman Jerome Powell at the Economic Club of Washington later on Tuesday.

“Fed Chair Jerome Powell in last week’s post-FOMC press conference outlined a potential ‘goldilocks’ scenario where inflation declines without a material rise in unemployment.” said analysts at ING, in a note. “We’ll see how much confidence he has in this scenario.”

Elsewhere, AUD/USD rose 0.7% to 0.6929 after the Reserve Bank of Australia raised its cash rate by an expected 25 basis points, but also signalled further rate hikes ahead.

“Further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” RBA Governor Philip Lowe said in a statement.

EUR/USD traded 0.1% lower at 1.0719, struggling to benefit from dollar weakness, having slid to 1.0709 in the previous session, the lowest since Jan. 9.

German industrial production fell more than expected in December, decreasing by 3.1% on the previous month, data showed earlier Tuesday, instead of the expected drop of 0.7%.

GBP/USD rose 0.1% to 1.2026, after tumbling to a one-month low of 1.2006 in the previous session.

Britain’s housing market stabilized in January, ending four months of decline, with mortgage lender Halifax calling property prices unchanged last month after a 1.3% drop in January.

USD/JPY fell 0.4% to 132.15, but the pair remains near Monday’s one-month high of 132.90 as speculation remains rife over who will be the next Bank of Japan Governor, with Reuters reporting that the candidates to succeed incumbent governor Haruhiko Kuroda will be presented by next week.

Dollar edges lower ahead of key Powell speech; Australian dollar soars

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