Singapore, March 7 (BNA): The US dollar was tentative on Tuesday ahead of US Federal Reserve Chairman Jerome Powell’s testimony, while the Australian dollar slipped after the Reserve Bank of Australia raised its cash rate by 25 basis points but eased its tightening. statement.
The Australian dollar fell to its lowest level in more than two months at $0.6690, and last fell 0.33% to $0.6712 after the central bank raised its cash rate to the highest level in more than a decade at 3.60%, as expected, according to Reuters reports.
The Reserve Bank of Australia changed the reference to further “increases” in rates, saying instead that “further tightening” would be needed, suggesting that the central bank may be nearing the end of the cycle of increases.
“A first look at the RBA statement suggests they are nearing the end of their tightening cycle, possibly one step closer to publicly discussing a halt,” said Matt Simpson, senior market analyst at City Index.
Meanwhile, the US Dollar Index, which measures it against six major competitors, fell 0.077% to 104.170, after falling 0.26% overnight. The index fell 0.6% for the month after rising 2.6% in February.
The euro rose 0.11% to $1.069, extending its nearly 0.5% gain overnight. The pound was last trading at $1.2044, up 0.19% on the day, while the kiwi was up 0.27%, at $0.621.
The Japanese yen was mostly flat at 135.94 against the dollar ahead of BoJ Governor Haruhiko Kuroda’s final policy meeting on Thursday and Friday.
Investor interest will be strong in Powell’s congressional testimony on Tuesday and Wednesday, with the February jobs report also due on Friday.
Kevin Cummins, chief economist at NatWest Markets, said Powell is likely to express growing concern about inflation, but may not live up to expectations for a 50 basis point rate hike on March 22.
After making big gains last year, the Fed raised interest rates by 25 basis points in its last two meetings, but resilient economic data throughout February raised fears that the central bank could return to bigger steps.
“We suspect it will sound non-committal at the moment and will take its cues from the upcoming looming key data,” said Cummins, who expects the Fed to raise interest rates by 50 basis points.
Fed fund futures traders are pricing in a 76% chance that the Fed will raise interest rates by 25 basis points at its March meeting. They also expect interest rates to peak at 5.48% in September and remain above 5% at the end of the year.
“What has become clear to financial markets is that inflation has proven to be more consistent than most people felt at the start of the year,” said economists at ING.
A return to declining inflation and a weak dollar narrative will have to wait.”