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© Reuters
By Peter Nurse
Investing.com – The U.S. dollar climbed to three-month highs Wednesday after Federal Reserve Chair Jerome Powell guided towards a higher terminal rate than previously expected on the first day of his testimony before the U.S. Congress.
At 03:10 ET (08:10 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 105.705, having earlier climbed to its highest level in three months at 105.868.
went in front of the Senate Banking Committee on Tuesday, and said that recent U.S. inflation and jobs data had been stronger than expected, and thus interest rates would likely have to increase by more than had seemed likely previously.
This resulted in U.S. Treasury yields surging higher, with climbing past 5% for the first time since 2007, and a further inverting of the yield curve.
Powell returns to Capitol Hill later Wednesday, this time testifying to the House Financial Services Committee.
Ahead of this, there is more economic data to study, in the form of the February and the for January.
These will provide clues about the health of the U.S. labor market ahead of Friday’s official , which is expected to show the economy added 200,000 jobs last month.
Elsewhere, traded largely unchanged at 1.0545, after earlier falling to a two-month low at 1.0525, recovering after rebounded by more than expected in January, rising 3.5% on the month after a revised drop of 2.4% the prior month.
Recent data has tended to suggest that the Eurozone’s largest economy has weathered the storm of soaring energy prices better than had been feared.
That said, the country’s consumers are still under pressure, as fell 0.3% on the month in February, an improvement from the 5.3% drop in January but still below expectations.
European Central Bank President is scheduled to speak in Geneva later in the session, and her comments will be studied carefully for clues of future monetary policy.
edged lower to 1.1823, falling to multi-month lows following Powell’s hawkish comments, and could drop further in the coming months, according to Bank of England policy maker Catherine Mann.
“There has been quite a hawkish tone coming from the Federal Reserve and ECB,” Mann said in an interview on Tuesday. “An important question in regards to the pound is how much of that existing hawkish tone is already priced into the pound. If Fed hawkishness is not priced in, the pound could fall further.”
rose 0.3% to 137.56 to a near three-month high, with the soaring U.S. yields weighing heavily on the yen, rose 0.2% to 0.6595, after sharp losses overnight, and rose 0.1% to 6.9708, nearing the significant 7-per-dollar level.
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