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FOREX-Dollar rebound falters as Fed's Powell strikes dovish tone

Published 01/15/2021, 10:58 AM
Updated 01/15/2021, 11:00 AM
© Reuters.
AUD/USD
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DX
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* Details of Biden's stimulus plan fail to lift greenback
* Bitcoin eyes record high above $42,000 after $12,000
plunge
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Kevin Buckland
TOKYO, Jan 15 (Reuters) - The dollar's rebound from a nearly
three-year low faltered after Federal Reserve Chair Jerome
Powell said on Thursday that interest rates would not rise any
time soon. The release of details of President-elect Joe Biden's $1.9
trillion stimulus later that day failed to give the greenback
additional support, with the main points of the plan already
reported by the media. Bitcoin BTC=BTSP continued to recover after a nearly
$12,000 plunge from the record $42,000 reached last week,
briefly topping $40,000 overnight.
The dollar index =USD has rallied after reaching its
lowest level since March 2018 last week, as the prospect of more
stimulus weighed on U.S. government bonds, sending the benchmark
10-year Treasury yield above 1% for the first time since March.
Although many analysts predict the greenback will resume the
decline that saw it slide almost 7% last year versus major peers
as the global economy recovers from the pandemic, there is
growing concern that the rise in yields will temper that
weakness. The dollar index was little changed at 90.26 after drifting
slightly lower overnight. It rebounded to as high as 90.73 at
the start of this week from as low as 89.206 on Jan. 6.
Powell said in a live-streamed interview with a Princeton
University professor that the economy remains far from where the
Fed wants it to be, and that he sees no reason to alter its
highly accommodative stance "until the job is well and truly
done."
The central bank's asset-buying program has weighed on the
dollar as it increases supply of the currency, diminishing its
value.
"Shorter term, Powell just put a lid on the U.S. dollar,"
said Westpac currency analyst Sean Callow.
"The baseline case is still for a substantial acceleration
in the global economy, which historically has proven to be
positive for most currencies against the U.S. dollar, but I
think there is potential to at least have a debate over whether
the U.S. dollar will be quite as weak as people expect."
The dollar was little changed at 103.76 yen JPY=EBS after
slipping 0.1% overnight.
The euro EUR=EBS eased 0.1% to $1.21465, on track for a
three-day decline.
The riskier Aussie dollar AUD= slid 0.1% to 77.650 U.S.
cents, tempering the previous session's 0.6% rise.

========================================================
Currency bid prices at 11:33AM (233 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2147 $1.2156 -0.07% -0.58% +1.2162 +1.2144
Dollar/Yen JPY=D3 103.7500 103.7750 +0.04% +0.51% +103.8400 +103.7050
Euro/Yen EURJPY= 126.03 126.16 -0.10% -0.70% +126.2000 +126.0200
Dollar/Swiss CHF=EBS 0.8882 0.8881 +0.05% +0.43% +0.8885 +0.8880
Sterling/Dollar GBP=D3 1.3678 1.3689 -0.09% +0.10% +1.3695 +1.3676
Dollar/Canadian CAD=D3 1.2648 1.2644 +0.04% -0.67% +1.2652 +1.2639
Aussie/Dollar AUD=D3 0.7766 0.7779 -0.13% +0.99% +0.7787 +0.7765
NZ NZD=D3 0.7204 0.7222 -0.24% +0.33% +0.7228 +0.7204
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

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World FX rates https://tmsnrt.rs/2RBWI5E
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