SINGAPORE- The dollar languished near a one-month low against a basket of currencies on Thursday, after Federal Reserve Chair Jerome Powell stuck to his usual messaging at his semi-annual testimony, offering little room for surprise.
Sterling was perched near a one-year high ahead of the Bank of England’s (BoE) interest rate decision later in the day, with Wednesday’s hot inflation report likely to keep policymakers on their toes.
In remarks to lawmakers on Capitol Hill on Wednesday, Powell said further US rate increases are “a pretty good guess” of where the Fed is heading if the economy continues in its current direction. Those comments were in line with what the central bank said at its policy meeting last week.
That sent the greenback down nearly 0.5 percent against a basket of six major peers in the previous session. The US dollar index last stood at 102.05 in early Asia trade, not far from its recent five-week low of 102.00.
The euro rose to a more than one-month high of $1.09925, extending Wednesday’s 0.65 percent jump.
“Markets had priced a lot of hawkishness from Powell prior to his testimony, so his comments didn’t really surprise too much on the hawkish end,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).
“At this stage, (markets) are not convinced that the FOMC can do two more rate hikes this year.”
Elsewhere, sterling rose 0.02 percent to $1.2770, not far from a one-year high of $1.2849 hit last week.
The BoE is set to raise interest rates for a 13th time in a row later on Thursday, a day after inflation data came in higher than expected, though investors are split between a 25-basis-point and 50bp hike.
