The dollar climbed at a four-month peak against its rivals as investors eyed the start of a two-day testimony by the U.S. central bank chief.
The greenback approached within striking distance of a 2019 peak as Powell testimony eyed. Fed Chair’s comments will be widely analysed for the economic impact of the deadly coronavirus on the U.S. economy. Powell may also provide clues on the outlook for monetary policy in the medium term.
Markets are now pricing in almost 40 basis points of U.S. rate cuts this year to cope with coronavirus damage.
Against a basket of its rivals, the dollar rose 0.01% to 98.91, its highest level since early October. The greenback is less than 1% away from a 2019 high of 99.67. It has gained 1.6% in the last week as currency volatility plumbed to record lows.
Low market volatility may stem from the central banks’ intervention to dampen market volatility in order to prevent stronger currencies.
Elsewhere, risk sentiment stabilized thanks to a slowdown in the rate of coronavirus infections. Market participants monitor the economic impact of the coronavirus outbreak. The drop in the number of new confirmed cases of coronavirus provided a glimmer of relief.
China’s virus epidemic may peak in February and then plateau before easing, the government’s top medical adviser on the outbreak said.
START TRADINGForex – Four-month peak for dollar ahead of FED
Investors resumed their focus on yield seeking strategies. Investors borrowed in low-yielding currencies such as the euro and the franc and invested in dollars or other high-yielding currencies.
Against a basket of currencies, the dollar was at its highest since mid-October at 98.876.
The dollar was steadier on the Japanese yen, which benefits from being a safe haven of its own, and last stood at 109.81. The Japanese currency was slightly softer by mid-session at 109.84 per dollar.
The US currency pushed the euro to slip to a four-month low at $1.0900.
The Australian dollar rose 0.3% to 0.6709 per U.S. dollar, even as the death toll climbed. It had hit a decade low on Monday and remains nearly 4.5% lower this year.
The New Zealand dollar languished close to a three-month low at $0.6390 ahead of a central bank policy meeting on Wednesday.
The British pound was last at $1.2925 after reassuring GDP data tugged it from two-month trough of $1.2870. Against the euro, the pound rose 0.1% to 84.43 pence. The British government has demanded the EU sign up to an agreement which would ensure the City of London can maintain access to European financial market after Brexit.
In commodities, Oil prices rose after weeks of decline as traders waited to see how demand in China might fare and whether OPEC could agree to trim supplies.
Brent crude futures gained 90 cents to $54.15 a barrel. U.S. crude rose 85 cents to $50.41.
Gold edged back from the previous day’s near one-week high as the dollar hit a four-month peak. Spot gold was down 0.3% at $1,567.54 per ounce by 1058 GMT, having touched its highest since Feb. 4 at $1,576.76 on Monday.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money