The dollar eased on Wednesday after Federal Reserve Chair Jerome Powell failed to offer fresh signs of a hawkish pushback against a resilient labour market in the United States, leading investors to bet that interest rates may not rise much further.
In a question-and-answer session before the Economic Club of Washington on Tuesday, Powell acknowledged that interest rates might need to move higher than expected if economic conditions remained strong but reiterated that he felt a process of disinflation was underway.
The U.S. dollar struggled to recover its losses in Asia trade on Wednesday, after slipping in the previous session as Powell spoke.
Sterling rose 0.06% to $1.2057, rebounding from Tuesday’s one-month trough of $1.19615.
Similarly, the euro was last 0.04% higher at $1.0732, after falling to $1.06695 in the previous session, its lowest since Jan. 9.
Powell “didn’t necessarily say something that was tangibly new …. I think we’re becoming quite accustomed to the idea that the Fed now is certainly data dependent,” said Chris Weston, head of research at Pepperstone.
“The markets and the central bank are all in a position now where they’re just watching the data, so for now we’re less sensitive to Fed officials and far more sensitive to data.”
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