SINGAPORE/LONDON (Reuters) – The dollar is expected to speak in a hawkish tone on Wednesday while the pound tumbles on better-than-expected UK inflation data, while Federal Reserve’s Jerome • Moved ahead of Chairman Powell’s congressional appearances.
The annual pace of UK consumer price inflation stabilized at 8.7% in May, despite expectations that it had cooled since April. The pound briefly rose 0.3% against the dollar to $1.2803 before rebounding.
As of 0845 GMT, the pound fell 0.34% against the dollar to $1.2723.
Adam Cole, chief currency strategist at RBC Capital Markets, said the weakness in the pound may be due to concerns that “inflation is high and stable enough to be negative for the currency.”
The dollar rose 0.5% against the yen to 142.15 yen after Bank of Japan Governor Kazuo Ueda said on Wednesday that he would maintain ultra-accommodative monetary policy.
Ueda’s comments reiterate the BOJ’s dovish stance as traders focus on the Fed.
Due to the appreciation of the yen against the yen, the US dollar index, which shows the dollar index against six major currencies, rose slightly to 102.60. The euro rose 0.1% to $1.0926.
Powell is scheduled to begin testifying before Congress at 10 a.m. Eastern time (2 p.m. Japan time).
“Despite the pause last week, Fed officials are still surprisingly aggressive in forecasting another 50 basis points of rate hikes by the end of 2023,” Maybank currency analysts said.
“It’s important whether (Powell) makes a stronger case that the Fed is serious about raising interest rates by another 50 bps, or if he gives the impression that it’s data dependent,” the source said. . “The former may do more to provide additional support to push the dollar index and (bond) yields higher.”
Elsewhere, there was little appetite for a rebound in the renminbi and Australian dollar, which has been hit by China’s shaky economic recovery and lack of significant stimulus.
China set the yuan’s midpoint lower than expected on Wednesday, dropping to a seven-month low of 7.1987 yuan in onshore trading, while offshore yuan fell to 7.2 to the dollar. fell beyond
The Australian market fell further after Tuesday’s central bank minutes were less hawkish than expected following this month’s rate hike. Last time, it was down 0.37% to $0.676.
“The path of least resistance is to go further down,” said Joe Capruso, a strategist at Commonwealth Bank of Australia.
“The Australian dollar could break below 0.6700 this week, especially if Powell is a hawk,” he said.
Bolstered by the launch of a new cryptocurrency exchange backed by Fidelity, Citadel Securities and Charles Schwab, bitcoin widened overnight to top $29,000 for the first time since late May. The last was $28,824.
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Reporting by Tom Westbrook and Farooq Suleiman.Editing: Sam Holmes, Kim Coghill, Sharon Singleton
Our criteria: Thomson Reuters Trust Principles.
