TOKYO- The dollar was stuck on the back foot against major peers on Wednesday as markets wait on comments from Federal Reserve Chair Jerome Powell, who is likely to renew a commitment to ultra-easy policy.
The greenback held declines against riskier currencies, with pandemic recovery hopes getting a boost as the International Monetary Fund upgraded its forecast for 2021 global growth.
Treasury yields, whose rise had supported the dollar at the start of this year, declined overnight amid caution about the eventual size of and potential delays to President Joe Biden’s $1.9 trillion fiscal stimulus plan.
“The stronger the world economic outlook, the weaker the US dollar,” said Joseph Capurso, currency analyst at Commonwealth Bank of Australia in Sydney.
“Powell is going to make clear that they don’t see any near-term exit from their very easy policy stance, and that’s going to pull the dollar down.”
The Fed chair is due to speak at a news conference after the central bank’s two-day policy meeting that ends Wednesday.
Earlier this month, he said in a web symposium with Princeton University that the US economy is still far from the Fed’s inflation and employment goals, and it is too early to discuss altering monthly bond purchases.