Forex

Dollar Continues to Slump as Investors look to Powell’s Testimony

Dollar close-up beside a downward graph

Currency markets in Asia had a little movement on Tuesday morning as investors look to Powell’s first testimony at the Congress happening later today. Traders expect the testimony to result in possible directions that the market might take this week.

The US dollar index measures the strength of the greenback against a trade-weighted basket of six other major currencies. It dropped 0.03 percent, landing at 89.75 by 10:30 PM ET, following an overnight rise from 89.44 to 89.92.

The dollar was slightly higher against the yen at 106.97, up 0.03 percent. Recently, the USD/JPY pair has been trading in the range of 106 and 107.

Investors began buying yen as the result of comments made by Japan’s economy minister Motegi. He said that the CPI figures are expected to continue its steady rise.

Also, Bank of Japan governor Kuroda stated that the central bank will continue its aggressive asset purchasing programs. According to him, the programs will stay until the Japan’s economy reaches its lofty inflation target of 2 percent.

The AUD/USD pair was last at 0.7846, trading lower by 0.10 percent.

Australia continues to lag behind when it comes to the global trend tightening due to the Reserve Bank of Australia’s firm stand on the wait-and-see mode. The bank decided to hold the rates down well into 2020.

Meanwhile, the USD/CNY pair was quoted at 6.6050, falling 0.16 percent.

The People’s Bank of China set the fix rate against the dollar at 6.3146, this against the 6.3378 rate yesterday. Focus on China will be on the possible extension of President Xi’s tenure after the Party wrote-off the two-term limit.

Powell’s Testimony on Capitol Hill

Federal Reserve logo on dollar bill

Investors await the congressional testimony that Federal Reserve head Jerome Powell will be conducting later Tuesday. The testimony will be his first appearance on Capitol Hill since his swearing-in ceremony earlier this month.

Determining the length of time that the dollar might take up for recovery can be largely influenced by the Fed’s decision regarding the pace of interest rate hikes this year.

The dollar index was up 0.9 percent last week. This acted as an extension of recovery after the dollar set a three-year low of 88.15 on February 16.

Read more about the USD boost from minutes of Fed January meeting.

Aside from Powell’s testimony, investors were also looking towards a number of US economic data released this week. These data include reports on consumer confidence, revise fourth-quarter growth, manufacturing and personal income and spending.

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