As traders tried to maneuver into the contradicting indications from the Federal Reserve officials on the fund stimulus withdrawal, the US dollar on Wednesday dither lower than an 11-week high as compared to its main counterparts.
Following its drop to 91.509 on Wednesday, the dollar index was at 91.806 early in the Asian session. It reached its highest since april 9, touching 92.408 at the end of last week.
The greenback gathered support in a span of hours after a couple of Fed officials claimed that the United States could experience longer than expected in time of high inflation. This, as Fed Chair Jerome Powell glossed over the soaring price pressures.
Last week, the dollar index galloped at almost 2.1 percent following the shock made by the Fed on the markets last June 16 through announcing that policymakers foresee a couple of increases in interest in 2023.
But as Powell stated on Tuesday that the inflation is rising because of a “perfect storm” with the return of the post-pandemic economy, the index surrendered about a third of its profit. Powell, additionally, stated that pressures on prices should relax independently.
On Thursday, six officials from the Fed are set to make their statements. Among them is New York Fed President John Williams, who initially said on Tuesday that any talks regarding the time of interest rates adjustment is still not that close.
“The market has shifted back into price discovery mode, reflecting the Fed’s recent shift and the need to fine-tune the taper lift-off date,” international head of foreign-exchange strategy at TD Securities, Mark McCormick, said through a client note. “Good U.S. data will be good for the USD and bad for risk markets, owing to the impact on the tapering process. Accordingly, we still like USD dip-buying into the early parts of the summer.”
