By Rae Wee
SINGAPORE, Feb 8 (Reuters) - The dollar eased on
Wednesday after Federal Reserve Chair Jerome Powell failed to
offer fresh signs of a hawkish pushback against a resilient
labour market in the United States, leading investors to bet
that interest rates may not rise much further.
In a question-and-answer session before the Economic Club of
Washington on Tuesday, Powell acknowledged that interest rates
might need to move higher than expected if economic conditions
remained strong but reiterated that he felt a process of
disinflation was underway.
The U.S. dollar struggled to recover its losses in Asia
trade on Wednesday, after slipping in the previous session as
Powell spoke.
Sterling rose 0.06% to $1.2057, rebounding from
Tuesday's one-month trough of $1.19615.
Similarly, the euro was last 0.04% higher at
$1.0732, after falling to $1.06695 in the previous session, its
lowest since Jan. 9.
Powell "didn't necessarily say something that was tangibly
new .... I think we're becoming quite accustomed to the idea
that the Fed now is certainly data dependent," said Chris
Weston, head of research at Pepperstone.
"The markets and the central bank are all in a position now
where they're just watching the data, so for now we're less
sensitive to Fed officials and far more sensitive to data."
Against a basket of currencies, the U.S. dollar index steadied at 103.31, after slipping 0.3% in the previous session.
The greenback had a short-lived rally following Friday's
blockbuster jobs report, which showed that nonfarm payrolls had
surged by 517,000 jobs last month.
That sent the U.S. dollar index to a one-month high of
103.96 on Tuesday, as investors raised their expectations of how
much further the Fed would need to keep raising interest rates.
Futures pricing shows that markets are expecting the Fed funds
rate to peak just above 5.1% by June. Elsewhere, the Japanese yen rose 0.16% to 130.88
per dollar, after surging 1.2% in the previous session.
Japan's government is considering presenting to parliament
its nominees for the next Bank of Japan governor and two deputy
governors sometime next week, sources told Reuters.
The kiwi edged 0.02% higher to $0.63265, while the
Aussie advanced 0.11% to $0.69675, after surging more
than 1% on Tuesday.
The Reserve Bank of Australia on Tuesday raised its cash
rate by 25 basis points, as expected, but reiterated that
further increases would be needed, indicating a more hawkish
policy tilt than many had expected.
"Most market participants were kind of caught off guard by
the hawkish tilt," said Carol Kong, a currency strategist at
Commonwealth Bank of Australia. She now expects two more 25
basis point rises in March and April, taking the cash rate to a
peak of 3.85%.
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(Reporting by Rae Wee; Editing by Bradley Perrett)
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