SINGAPORE- The dollar regained its footing on Wednesday and inched higher after a slew of Federal Reserve speakers left the door open to further rate hikes, as traders looked to a speech from Chair Jerome Powell on the central bank’s future policy path.
The greenback, which tumbled last week in the wake of the Fed’s decision to hold its policy rate steady and on data pointing to a cooling US labor market, has found a floor as markets remain at odds over whether a peak in US rates has been reached and how soon the Fed could begin easing monetary conditions.
Futures point to a roughly 17 percent chance of another hike by January, but are pricing in a 21 percent chance that rate cuts could come as early as March, according to the CME FedWatch tool.
The British pound which earlier in the week hit a seven-week top against the dollar above $1.24, was last some distance away, falling 0.19 percent to $1.22755.
The Japanese yen again slipped to the weaker side of 150 per dollar after a slight reprieve last week. It last stood at 150.66 per dollar.
The US dollar index which last week clocked its sharpest weekly fall in about four months, rose 0.11 percent to 105.66 and was on track for a weekly gain.
“We’ve seen a slight recovery in the US dollar, but this is to be expected following such a sharp selloff,” said Matt Simpson, senior market analyst at City Index.
“We’re also seeing the obligatory hawkish pushback from Fed speakers this week, as they try to steer market expectations away from rate cuts.”
A slew of Fed policymakers on Tuesday maintained a balanced tone and said they are weighing strong economic data, some signs of a slowdown, and the impact of higher long-term bond yields as they consider if they will need to hike rates further to bring down inflation.