Dollar Steady as Fed Chair Powell Testifies, Bitcoin Pauses

6 Mar 2024 , 09:43 AM

The US dollar stayed mostly stable on Wednesday as traders refrained from placing significant wagers in front of Federal Reserve Chair Jerome Powell’s congressional appearance, the European Central Bank’s rate announcement, and the release of the US employment report later this week.

In terms of cryptocurrencies, bitcoin increased little but remained below the all-time high it hit during a wild overnight session.

The lack of catalysts caused the dollar to remain in a narrow range after it fell overnight on data from the Institute for Supply Management (ISM) indicating that the expansion of the U.S. services sector slowed slightly in February.

Backed by stronger-than-expected U.S. economic statistics, the dollar has gained 2.4% year to date. However, in recent sessions, it has halted as investors seek more clarity on Fed policy.

The February U.S. jobs report, which is expected to shock markets, is a test that lies ahead on Friday. An upside surprise could contribute to the dollar’s increase this year.

Regarding the U.S. economy, traders were also anticipating Fed Chair Powell’s first day of testimony before Congress. Powell is anticipated to restate the Fed’s stance that it will hold off on cutting rates until it has more information.

Based on historical data, the CME FedWatch tool indicates that markets have priced in a 60% chance of a rate drop in June.

At 103.82, the dollar index, which gauges the strength of the US dollar relative to a basket of six other currencies, remained largely stable.

In other news, during its policy meeting on Thursday, the European Central Bank is predicted by most to keep interest rates at a record 4%. Instead, the emphasis will be on indicators of when rates may begin to decline as well as the central bank’s revised estimates of the economy.

The euro was steady at $1.0852.

The pound fell by 0.1% to $1.2695 on Wednesday ahead of the British budget.

After the US dollar gave up its recent gains against the Japanese yen overnight and fell from last week’s high of 150.85, the yen remained at 149.92 per dollar.

The biggest cryptocurrency in the world, bitcoin, is also being closely watched by markets after it hit a record high over night and then dropped precipitously.

It had surged strongly since October as investors poured money into U.S. spot exchange-traded crypto products and on the possibility that global interest rates may drop. It was recently up 0.88% at $63,876, taking a pause.

For feedback and suggestions, write to us at [e-mail]