Dollar steady as investors look to Powell for clues

London

THE dollar was steady versus major currencies on Monday (Mar 21), with investors awaiting remarks from US Federal Reserve chair Jerome Powell later in the day and from other central bank policymakers this week for monetary policy clues.

Currency markets have been roiled over the past month by the financial fallout from Russia's invasion of Ukraine as the economic costs come into sharper focus, including higher inflation fuelled by rising energy costs.

As the crisis continues, central banks globally have been grappling with how quickly to try to stem soaring inflation.

The Fed raised its key interest rate by 25 basis points last week for the first time since 2018. Traders are now focused on the potential speed and size of future rate hikes.

A series of speeches by Fed policymakers this week, kicked off by Powell on Monday, could provide some clues. At least one Fed speaker is due each day this week and Powell himself is making another appearance on Wednesday.

The dollar index, which measures the greenback against 6 peers, edged up 0.1 per cent to 98.376. The index had dipped earlier in European trading hours.

The Fed's stance has contrasted with the Bank of Japan (BOJ), which on Friday maintained its huge stimulus programme and held rates steady, arguing that the rise in inflation would be temporary.

The BOJ's dovish policy has helped weaken the yen, with the Japanese currency trading near six-year lows versus the dollar.

The yen was broadly flat on Monday, at 119.19 yen per dollar, after touching 119.40 yen on Friday, its lowest level since 2016.

The euro edged 0.1 per cent lower versus the dollar to US$1.10345.

The British pound declined 0.3 per cent to US$1.31375 on Monday after weekly data on Friday showed a rise in bearish sterling bets, days before an update on the country's finances on Wednesday.

Both the Australian and New Zealand dollars dipped on the day, down 0.4 per cent and 0.3 per cent respectively, as risk appetite remained in check across markets. REUTERS