LONDON (Reuters) The dollar struggled to find direction on Tuesday, settling in recent ranges while investors were waiting for U.S. Federal Reserve Chair Jerome Powell to speak at an upcoming congressional hearing later in the day.
Global stocks rose due to a rebound in the late session for Wall Street, while U.S. Treasury yields were a bit higher. The equity markets have seen an unsteady beginning to the year, plummeting due to speculation that there is a chance that the Fed will tighten its policy faster than initially anticipated.
Investors hope Powell will offer clues to the time frame for tightening monetary policy in his responses to inquiries from the Senate Banking Committee. He is seeking a second term of four years as the head of the Fed.
Powell will explain to Congress the Bank’s plans to “prevent rising inflation from becoming more ingrained,” the pre-released remarks show.
1151 GMT at 1151 GMT, it was 1151 GMT. U.S. dollar index was approximately 0.1 percent lower on the day, with 95.842 far from the record highs that it reached at the close of November as hawkishness increased of Fed policymakers.
Joel Kruger, the currency strategist at LMAX Digital, stated that investors would undoubtedly be watching any news regarding the Fed’s policy on inflation “because it’s something that no one can definitively nail down, and the Fed continues to maneuver regarding the guidance is concerned.”
“If we continue to see downward pressure on the stock market… it’s not just that you are we are seeing dollar demand on yield spreads, but there is also dollar demand in flight to safety,” the analyst said.
Some of Wall Street’s largest banks are now preparing to see four U.S. interest rate hikes this year, which will begin in March.
Meanwhile, the newest head of Germany’s central bank said the euro zone’s inflation surge isn’t entirely temporary and that there might be higher-than-projected readings. His remarks contest the European Central Bank’s stance about inflation pressures.
The Euro-dollar was stuck in the current range, around $1.13425. However, the currency hit an all-time high of seven weeks against the Swiss franc, the pair trading in the field of 1.0507.
This comes after a spike in the number of deposits held by the Swiss National Bank last week. This could be a signal of the fact that central banks might be intervening to reduce the strength of the franc.
“Outflows of the CHF could continue to flow today Powell is sending hawkish signals to the market, and the UST yields increase, which could lead to a stronger rise over 1.0500 of EUR, CHF,” said ING.
The Swiss franc also serves as a haven for securing risks to the political landscape in Italy, ING said. The Italian Parliament is meeting to elect the next president later this month, with Premier Mario Draghi seen as the most popular candidate. Italian government bond yields increased amid concerns about the country’s stability in the political arena.
The U.S. dollar was up approximately 0.1 percent over the Japanese yen at 115.370.
According to a quarterly survey, Japanese households’ expectations of inflation reached a two-year peak, an indication that the rising cost of living began to alter people’s perceptions of future price changes.
The British sterling hit an all-time high of two months against the dollar U.S. dollar at $1.362 in the early trading hours.
The Australian dollar was up 0.1 percent at $0.71805, thanks to reports that showed retail sales that surpassed estimates for the second consecutive month in November.
After successfully containing the coronavirus in much of the pandemic, Australia is now being flooded in the spread rapid that is the Omicron version, with cases at near records levels.
Hospitalizations for COVID-19 across the United States hit a record level this morning, as a rise in the number of infections caused due to the highly infectious Omicron strain of the disease has affected health systems across various states.
U.S. consumer inflation data for December will release on Wednesday.
In other areas, bitcoin was at around $42,000 after dropping to below $40,000 on Monday, to the lowest level since September’s end of the month.