U.S. Dollar Higher After Powell's Comments
June 29 2022 - 8:57AM
RTTF2
The U.S. dollar appreciated against its most major rivals in the
New York session on Wednesday, as risk sentiment dampened after Fed
Chair Jerome Powell warned of an economic downturn in the wake of
the central bank's monetary policy tightening to control
inflation.
Speaking at the European Central Bank's forum in Sintra, Powell
said that the central bank would not allow a transition from a low
inflation environment to a high inflation environment.
"We had expected that this year that growth would moderate to a
more sustainable path. We also are, of course, raising interest
rates and the aim of that is to slow growth down so that supply
will have a chance to catch up," Powell added.
U.S. stocks are mostly lower as investors weighed the prospects
of aggressive interest rate hikes that could fuel a recession.
Revised data from the Commerce Department showed that U.S.
economic activity shrank slightly more than previously estimated in
the first quarter of 2022.
The report showed the decrease in real gross domestic product in
the first quarter was revised to 1.6 percent from the previously
reported 1.5 percent. Economists had expected the drop in GDP to be
unrevised.
The slightly bigger than previously estimated decline in GDP in
the first quarter came on the heels of the 6.9 percent spike in GDP
in the fourth quarter of 2021.
The greenback firmed to near 2-week highs of 1.0467 against the
euro and 1.2106 against the pound, up from its early lows of 1.0536
and 1.2213, respectively. The greenback is likely to find
resistance around 1.03 against the euro and 1.20 against the
pound.
The greenback touched 137.00 against the yen, its strongest
level since September 1998. If the greenback strengthens further,
it is likely to test resistance around the 139.00 level.
The greenback hovered at a fresh 2-week high of 0.6862 against
the aussie. On the upside, 0.67 is possibly seen as its next
resistance level.
The greenback moved up to a fresh 2-week high of 0.6205 against
the kiwi and a 2-day high of 1.2900 against the loonie, reversing
from its prior lows of 0.6260 and 1.2844, respectively. The
greenback is seen finding resistance around 0.60 against the kiwi
and 1.31 against the loonie.
In contrast, the greenback held steady against the franc, after
having dropped to more than a 2-month low of 0.9495 at 7:30 am ET.
At yesterday's trading close, the pair was quoted at 0.9572.
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