Dollar rises but near 2021 low on bets over Fed policy

by Jonathan Adams
Dollar

The U.S. Dollar Index that tracks the greenback against a basket of other currencies rose 0.23% to 90.332

The dollar rose on Wednesday morning in Asia, but remained near its lowest levels of 2021, as investors raised bets that U.S. inflation data will not change the U.S. Federal Reserve’s current dovish monetary policy.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies rose 0.23% to 90.332 by 3:37 AM GMT.

The USD/JPY pair added 0.21% to 108.84.

The AUD/USD pair fell 0.49% to 0.7802, with investors continuing to digest Australia’s big-spending budget, which was handed down on Tuesday. The NZD/USD pair dropped 0.51% to 0.7237.

The USD/CNY pair inched up 0.15% to 6.4383. Meanwhile, the GBP/USD pair inched down 0.19% to 1.4114, remaining above the 1.4 mark.

The dollar dropped to its lowest level in two months against the euro during the previous session, as Tuesday’s Zentrum fur Europaische Wirtschaftsforschung Economic Sentiment Index read a better-than-expected 84.

Concerns that higher U.S. inflation numbers could pressure the Fed to hike interest rates sooner than expected drove a selloff in rate-sensitive tech stocks earlier in the week. However, repeated assurances from Fed officials, including Chairman Jerome Powell, have seemingly soothed market concerns.

As long as the equity market doesn’t experience a more drastic correction, the dollar is unlikely to get a safe-haven bid, National Australia Bank senior currency strategist Rodrigo Catril told Reuters.

We know now that the Fed is very much firmly committed to easy policy. Everybody else has come out firmly saying it’s not the time and that’s a dollar negative story, he added.



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