SINGAPORE- The US dollar eased on Thursday and hit a one-month low against the yen as traders zeroed in on the idea that US interest rates were likely to fall this year even after some upside surprises on inflation.
In cryptocurrencies, bitcoin retreated from a record struck earlier in the week, though its 0.4 percent loss on the day was insignificant in comparison to its 55 percent rally for the year thus far.
In his testimony to lawmakers on Wednesday, US Federal Reserve Chair Jerome Powell said rate cuts will “likely be appropriate” later this year “if the economy evolves broadly as expected” and once officials gain more confidence in inflation’s steady deceleration.
Those remarks, coupled with data released on Wednesday that pointed to an easing of labor market conditions, sent US Treasury yields falling, which in turn pushed the greenback broadly lower.
Against the yen, the dollar bottomed at a roughly one-month trough of 148.94 in early Asian trade on Thursday.
The euro and sterling held near one-month highs struck in the previous session and last bought $1.0902 and $1.2738 respectively.
“Dollar weakness against the major currencies came down to both the weak labor market data … and also Powell’s testimony,” said currency strategist Carol Kong at Commonwealth Bank of Australia.
“Powell didn’t really give away too much … (but) judging by the market reaction, Powell’s comments were less hawkish than some had expected. Markets were likely relieved that Powell didn’t change his risk assessment on inflation even after the January CPI (consumer price index) figures.”