He super dollar touched three month highs against a basket of currencies on Tuesday after the chairman of the Federal Reserve, Jerome PowellI said that the US central bank is likely to raise rates more than expected.
Powell also warned that the process of getting inflation back to 2% has “a long way to go.
The Fed is ready toIncrease the pace of rate hikes if the “totality” of incoming data suggests tougher action is needed to control price increasesPowell told US lawmakers on Tuesday.
The remarks came after the bank had slowed the pace of tightening to 25 basis points at its last two meetings, following the biggest hikes last year.
“Powell is explicitly talking about a higher interest rate target. This is something the market has been talking about, but obviously not fully priced in.” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance in Charlotte, North Carolina.
The dollar index rose 1.3% and stood at 105.65 points. The euro was down 1.28% at $1.0548. The greenback hit 137.17 Japanese yen, up 0.9% on the day and the highest level since December 20.
Sterling fell 1.68% to $1.1824, after touching $1.1822, the lowest since November 21.
The Australian dollar was down 2.24% at $0.6582, the lowest since Nov. 11.
Source: Ambito
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