The US dollar came under massive buying interest yesterday after the new Fed Chair, Jerome Powell, fueled further speculation for a fourth Fed hike this year. Overnight, the yen got an extra boost after the the Bank of Japan bought less government bonds maturing in over 25 years.
Jerome Powell Fuels Speculation for a Fourth Hike this Year
The dollar gained against all its major counterparts yesterday following Jerome Powell’s testimony before Congress. The greenback gained the most against SEK, EUR and NOK in that order, while the currencies that underperformed the least were the safe havens JPY and CHF.
Testifying for the first time before House Financial Services Committee, the new Fed Chair adopted a more upbeat tone than many may have anticipated, including us. Yes, he appeared optimistic on the economy as we have expected, but several comments of his were interpreted as strengthening the case for a fourth hike by the Fed this year, something we noted that he may prefer to avoid. Specifically, answering a question about the Fed’s pace of rate increases, he said that his personal outlook for the economy has strengthened since December.
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