But Powell said Wednesday that “braking at this point is a good way to balance the risks.” He added, however, that controlling inflation “will require keeping policy tight for some time.”
Markets price the Fed at an 80% chance of raising rates by 50 basis points at the next meeting, versus a 20% chance of another 75 basis point hike, according to the CME’s Fedwatch tool.
The dollar it fell as much as 1.64% to 135.85 yen, its lowest level since August 23, but then recovered to 136.26. The dollar-yen pair is extremely sensitive to changes in long-term US Treasury yields, which fell on Powell’s comments and hit a two-month low of 3.587% in London trading on Thursday.
The pound was also up strongly, up 0.88% to $1.2164, its highest since August 12, hovering around its 200-day moving average.
The personal consumption price index in the United States will be published on Thursday, to see if it offers more information on the inflation situation and, therefore, on the Federal Reserve’s rate hike plans, as well as data on the employment in the United States on Friday.
Simon Harvey, head of currency research at Monex Europe, said he thought markets would look heavily at PCE data and even when it came to Friday’s jobs data “if it weakens substantially then the market moves, if stay the same, we start thinking about the CPI”.
The euro has also made some gains, rising 0.38% to $1.04485, but has resisted making a further push to cross the $1.05 level.
The cities of Guangzhou and Chongqing announced on Wednesday the easing of COVID restrictions, while authorities in Zhengzhou, where the factory of Foxconn, the world’s largest maker of Apple iPhones, is located, the scene of unrest among workers over the COVID, they also announced the “orderly” resumption of business.
The Chinese yuan experienced some volatility in overseas trading after media reports that the capital Beijing would allow some people to stay home. The dollar rose 0.3% to 7.068 yuan, after weakening as much as 0.3% to a two-week low of 7.0256.
Source: Ambito
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