NEW YORK (US) – The US dollar edged higher on Thursday, recovering some of the ground lost in the prior session after the head of the Federal Reserve told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy.
The dollar index, which measures the greenback against a basket of six currencies, was 0.1% higher at 92.504. The index fell as low as 92.272 earlier in the session.
The index has climbed in recent weeks as investors got more sanguine about the outlook for the greenback, driven by an increasingly upbeat assessment of the U.S. economy by the Federal Reserve, which has brought forward the time frame on when it will next raise rates.
On Wednesday, Fed chair Jerome Powell said he is confident recent price hikes are associated with the country’s post-pandemic reopening and will fade, and that the Fed should stay focused on getting as many people back to work as possible.
“There are, off course, differing voices on the FOMC but the Chairman’s position seems quite clear; the taper discussion and decision will not occur until late this year,” Shaun Osborne, Chief FX Strategist at Scotiabank, said in a note.
Chair Powell appears before the Senate Banking Committee Thursday in a hearing where he is likely to be grilled again about higher than expected inflation, this time by lawmakers key to vetting his possible renomination.
The greenback found some support Thursday, after data showed the number of Americans filing new claims for unemployment benefits fell last week as the labor market steadily gains traction.
Sterling was about flat against the dollar after Bank of England policymaker Michael Saunders said the central bank could decide to halt its bond-buying programme early due to an unexpectedly sharp rise in inflation.
The Canadian dollar weakened on Thursday – hurt by weakness in oil prices and an ADP report that showed Canada lost 294,200 jobs in June, mainly on a plunge in service sector jobs in industries hit hard by COVID-19 restrictions.
