Dollar Evens as FX Markets Concentrate on Powell

After a late-session comeback for Wall Street, global stocks increased, while U.S. Treasury yields were a touch higher. Equity markets have had a soft start to the year, declining because of bets that the Fed will tighten policy earlier than initially anticipated.

Investors are hoping that Powell will give clues regarding the timing of monetary policy tightening when he responds to questions from the Senate Banking Committee as he seeks a second four-year term as head of the Fed.

Powell will notify Congress that the bank will prevent higher inflation from becoming entrenched, pre-released comments show.

At 1151 GMT, the U.S. dollar index was about 0.1% more down on the day, at 95.842 – well below the 16-month highs, it connected at the end of November amid increasing hawkishness from Fed policymakers.

Joel Kruger, the currency strategist at LMAX Digital, stated that investors would be listening for any information regarding the Fed’s attitude to inflation because that’s the thing that nobody can settle down. The Fed keeps maneuvering as far as the guidance goes.

Some of Wall Street’s largest banks now expect four U.S. interest rate hikes this year, beginning in March.

Euro-Dollar Stuck

Meantime, the new head of Germany’s central bank stated the euro zone’s inflation surge is not completely temporary and that there could be higher-than-projected readings. His comments question the European Central Bank’s narrative on price pressures.

Euro-dollar was stuck within recent ranges, approximately $1.13425. However, the euro hit a seven-week high versus the Swiss franc, with the pair changing hands about 1.0507.

This was a result of a peak in sight deposits in the Swiss National Bank last week. It is a potential sign that the central bank is intervening to cap the franc’s strength.