By Peter Nurse
Investing.com – The dollar edged higher in early European trade Wednesday, stabilizing after weakness overnight following commentary from Federal Reserve Chair that again indicated the central bank will take time to tighten monetary policy.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 91.865, after dropping as low as 91.672 late Tuesday.
was up 0.2% at 110.81, dropped 0.2% to 1.1919, after rebounding from as low as $1.18470 at the end of last week, fell 0.1% to 1.3931, while the risk-sensitive was down 0.1% at 0.7545.
Powell stuck largely to his previous script when addressing lawmakers on Tuesday, acknowledging that the price increases seen in the economy recently had been bigger than expected but repeating that they will probably wane. Powell was again upbeat on the outlook for the labor market however.
“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances,” Powell said in a hearing before a U.S. House of Representatives panel.
Additionally, New York Fed chief John Williams, in an interview on Bloomberg TV Tuesday, said a discussion about raising interest rates is still some way off.
These comments didn’t really make the Fed’s timetable for tightening monetary policy any clearer, and disappointed some dollar bulls would had been looking for a steer towards an early move given the hawkish tone at the last Fed meeting. The only comfort for dollar bulls came from San Francisco Fed President Mary Daly, who said that the “substantial further progress” in the recovery, which the Fed has made a precondition for starting to tighten policy, was within reach this year.
The gained 1.9% last week, its biggest weekly rise since March 2000, but has since given up about a third of these sharp gains.
The Fedspeak continues later Wednesday, with FOMC members Michelle Bowman, Eric Rosengren and Raphael Bostic all slated to speak at events throughout the day.
Data releases Wednesday include for May and June data, but the numbers on Friday will be the next major economic focus.
Elsewhere, rose 0.1% to 350.33 and rose 0.3% to 293.86 the day after the National Bank of Hungary lifted its base rate by 30 basis points to 0.9% to combat inflationary pressures, becoming the first central bank in the European Union to raise rates in the wake of the Covid-19 pandemic.
The Czech National Bank is expected to follow suit later Wednesday, with analysts largely expecting the central bank to lift its benchmark rate by 50 basis points as, like its neighbor, it struggles to cope with a spike in consumer prices.
traded 0.1% higher at 25.504 and up 0.1% at 21.369.
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