Dollar dips as fed official sparks rate hike doubts
The dollar came under pressure against a basket of global currencies on Tuesday after a top Fed official suggested a caution approach to further interest rate increases may be needed to revive inflation.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.20% to 95.62.
“I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target." Federal Reserve Governor Lael Brainard said Tuesday.
Brainard comments dampened investor expectations for rate hike later this year, and come a day ahead of testimony from Fed chair Janet Yellen on the state of the U.S. economy and the Fed’s monetary policy outlook.
Yellen is scheduled to testify on the economy before the Senate Banking Committee at 10:00AM ET (14:00GMT) Wednesday. On Thursday, she will appear in front the House Financial Services Committee also at 10:00AM ET.
Despite the dip, the greenback held firm against sterling and the Canadian dollar.
GBP/USD fell to $1.2847, after Ben Broadbent, the Bank of England’s deputy governor, failed to address the outlook for UK interest rates in a speech, stoking fears that recent optimism about tighter monetary policy conditions may have been misplaced.
USD/CAD traded at C$1.2923, up 0.26%, as a rebound in oil prices failed to stem losses in the oil-linked Canadian dollar.
USD/JPY eased from a four-month against the yen, falling to Y113.94, down 0.10%