SINGAPORE- The dollar stepped back from a tariff-driven rally on Wednesday, as traders awaited US inflation data and news on the broader trade front, though hawkish remarks from Fed Chair Jerome Powell pushed up US yields and lent some support against the yen.
In Asia, the dollar rose 0.7 percent to 153.56 yen breaking above its 200-day moving average, but elsewhere it was nursing modest losses and traded at $1.0358 per euro
Federal Reserve Chair Jerome Powell, in testimony on Capitol Hill, stuck to a view there was no hurry to lower interest rates, which pushed 10-year Treasury yields up about 4 basis points.
“The yen is always quite sensitive to dollar yields,” said Nick Twidale, chief market analyst at ATFX Global in Sydney, noting that a break of the 200-day moving average may have exaggerated the yen’s dip, in thin trade before US CPI data.
Speculators in the currency market are long dollars and some may be nervous that a softer reading could stoke bets on rate cuts and force an unwind of wagers on a higher dollar.
Data last week showed net US dollar long positions against other G10 currencies stood around $31.5 billion.
Sterling which rose about 0.7 percent on Tuesday, hovered at $1.2441 in Asia session. The Australian dollar held a more modest gain at $0.6291.
The European Union, Mexico and Canada have condemned US President Donald Trump’s decision to impose 25 percent tariffs on steel and aluminum imports and the European Commission head Ursula von der Leyen said there would be counter-measures.
