Dollar falls ahead of Powell's comments; Swiss franc at seven-week high

The dollar fell on Tuesday but stuck in recent ranges as investors waited for US Federal Reserve Chairman Jerome Powell to speak at a congressional hearing later in the day.

European stocks rose in early trade after Wall Street recovered late in the session, while US Treasury yields were slightly higher.

Experts at https://exness-vietnam.asia/login/ have learned, that investors are hoping Powell will give hints about the timing of monetary policy tightening when he answers questions from the Senate Banking Committee as he runs for a second four-year term as head of the Fed.

Powell will tell Congress that the bank will "prevent higher inflation from taking hold", according to previously released comments.

At 08:40, the US dollar index was about 0.1 per cent lower for the day at 95.817, well below the 16-month high it touched in late November amid increasing aggressiveness from Fed policymakers.

"We expect any fall in the dollar to be short-lived as the Fed's imminent tightening story continues to offer a very positive implication for the dollar," ING FX analysts wrote in a note to clients.

"The recognition that a faster rate hike is needed may be enough to provide great support for the dollar today," ING noted.

Some of Wall Street's biggest banks now expect four US interest rate hikes this year, starting in March.

The euro-dollar is stuck in a recent range, around $1.1346, but the euro hit a seven-week high against the Swiss franc, with the pair changing hands around 1.0497.

This follows a rise in demand deposits held by the Swiss National Bank last week, a possible sign that the central bank is intervening to limit the franc's strength.

"Outflows from the Swiss franc could continue today if Powell gives hawkish signals to the market and UST yields rise again, contributing to a more decisive breakout of the EUR/CHF pair above 1.0500," ING wrote.

According to ING, the Swiss franc also acts as a safe haven to hedge political risks from Italy. The Italian parliament will meet this month to elect a new president and Prime Minister Mario Draghi is seen as the leading candidate. Italian government bond yields rose as investors worried about the country's political stability.

The US dollar rose about 0.1 per cent against the Japanese yen to 115,280.

Japanese households' inflation expectations rose to a two-year high, a quarterly survey showed, suggesting that rising living costs are beginning to change public perceptions of future price changes.

The British pound hit a two-month high against the US dollar at $1.362.

The Australian dollar rose 0.2% to $0.71825, boosted by data showing that retail sales beat forecasts for a second consecutive month in November.

After successfully containing the coronavirus for much of the pandemic, Australia was gripped by the rapid spread of the Omicron variant, with infection rates near record highs.

COVID-19 hospitalisations in the United States reached record levels on Monday as a surge in infections caused by the highly contagious Omicron variant put strain on health systems in several states.

US consumer inflation data for December is due out on Wednesday.

Elsewhere, bitcoin is back up around $42,000, falling below $40,000 on Monday for the first time since September.

Read more: Evergrande moves closer to default again as China tries to calm markets