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10/07/24
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USD Flat Ahead of Powell’s 2nd Testimony
On Wednesday, the U.S. dollar was steady in early European trade and remained close to a 3-week low, after the first day of Fed Chair Jerome Powell’s -day testimony Before Congress.
The U.S. dollar index, which measures its strength against 6 other major currencies, inched slightly down to 104.770, slightly higher than the near one-month low of 104.622 hit on Monday.
On Wednesday, the dollar traded in a tight range after Powell’s first testimony before Congress, as the Fed chair flagged the recent labor market easing as an important factor in deciding when the Fed will begin cutting interest rates.
Powell also noted a rate cut was not appropriate until the Fed had more confidence that inflation was headed toward the 2% target.
It is believed the Fed chief may be preparing the ground for an interest rate cut in September as he mentioned that high inflation was not the only risk the central bank had to face.
Powell will return to Washington later today and traders will be looking for more direction in his comments before consumer inflation data on Thursday.
Analysts at ING said in a note Powell’s remarks focused on 2-way risks, reiterating the requirement for more data input to justify rate cuts.
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