Elsewhere, the yen rose 0.15%, with one dollar buying 130.88 yen, after surging 1.2% in the previous session. Japanese real wages rose for the first time in nine months thanks to robust temporary bonuses, data on Tuesday showed. Substantial pay growth in spring labour talks is seen as an essential condition for the Bank of Japan to start to tighten its ultra-loose monetary policy. The kiwi slipped 0.26% to $0.634, while the Aussie advanced 0.42% to $0.699, 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. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates Euro vs. dollar ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Rae Wee and Harry Robertson; Editing by Bradley Perrett, Christopher Cushing and Christina Fincher)
(Adds chart, details of ECB speeches and ECB rate expectations;
updates prices)
By Rae Wee and Harry Robertson
SINGAPORE/LONDON, Feb 8 (Reuters) - The dollar fell on
Wednesday after Federal Reserve Chair Jerome Powell declined to
meaningfully harden his tone on inflation in a closely-watched
speech, despite last week's very strong employment numbers.
In a question-and-answer session before the Economic Club of
Washington on Tuesday, Powell said interest rates might need to
move higher than expected if the economy remained strong, but
reiterated he felt a process of "disinflation" is underway.
The dollar slipped as Powell spoke and lost more ground in
early European trading on Wednesday.
The euro was last up 0.21% to $1.075, after
falling to $1.067 in the previous session, its lowest since Jan.
9. It remained far above the 20-year low of $0.953 hit in
September.
Powell "didn't necessarily say something that was tangibly
new," 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."
Investors were also digesting comments from two German
European Central Bank (ECB) officials, who said euro zone
interest rates still had a way to rise.
"From where I stand today we need further, significant rate
hikes," German central bank chief Joachim Nagel told the
newspaper Boersen-Zeitung on Tuesday.
His colleague Isabel Schnabel said: "It is not yet clear
that monetary policy is actually working so much that we can
hope for inflation to return to our inflation target of 2% in
the medium term."
Against a basket of currencies, the U.S. dollar index
fell 0.19% to 103.1 on Wednesday, after slipping 0.3% in the
previous session.
Sterling rose 0.3% to $1.209, rebounding from
Tuesday's one-month trough of $1.196.
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 on Wednesday showed that markets
are expecting the Fed funds rate to peak just above 5.1% by
June, from a range of 4.5% to 4.75% currently.
Meanwhile, according to pricing in derivatives markets , traders expect the ECB to hike rates to rise
to around 3.5% in late summer, from 2.5% now.
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