Dollar declines as Powell's testimony is unsurprising

22 Jun 2023 , 12:28 PM

On Thursday, when Federal Reserve Chair Jerome Powell adhered to his regular messaging at his semi-annual hearing, leaving little chance for surprise, the dollar remained close to a one-month low against a basket of currencies.

Prior to the Bank of England’s (BoE) interest rate announcement later in the day, the pound was trading close to a one-year high, with the strong inflation report from Wednesday likely keeping officials on their toes.

Powell stated that if the economy continues in its current course, further U.S. rate rises are ‘a pretty good guess’ of the Fed’s future plans in remarks to lawmakers on Capitol Hill on Wednesday. The central bank’s remarks at its most recent policy meeting were consistent with such remarks.

After falling about 0.5% the previous day, the U.S. dollar index recently stood at 102.09, not far from its most recent five-week low of 102.00.

Asia’s trading was light because China and Hong Kong were off for the weekend.

A 0.65% increase on Wednesday was extended to a more than one-month high of $1.0995 for the euro.

After inflation statistics came in higher than anticipated on Wednesday, the BoE is expected to raise interest rates for the 13th consecutive time later on Thursday. However, traders are split between a 25-basis-point and a 50-basis-point increase.

British inflation defied market predictions in May and remained at 8.7%, keeping it the highest of any major country.

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