Inveseting.com – The dollar was higher against the british pound and emerging market currencies on Wednesday in early european trading, but within a range which is enforceable against most of its peers as the market prepared itself for the two days of testimony by federal Reserve chairman, Jerome Powell, in front of the Congress.
Powell should begin his testimony at 16: 00, in a climate of increased uncertainty regarding the evolution of interest rates for the rest of the year. The market has reduced its expectations for a policy easing immediate and high-impact in response to the report on the u.s. job market is stronger than expected, but it continues to expect a reduction of 25 basis points in the federal funds rate when the Federal Open Markets Committee will meet in late July.
The dollar strengthened since Friday, but many analysts believe that it has passed its cyclical peak, since the next movement seems to be more likely to fall than to rise. Analysts at ING underline that the cost of buying protection against a fall in the euro has fallen sharply in recent weeks, while the cost of protection against the appreciation of the euro has increased somewhat.
Despite all this, the strategist of ING, Chris Turner, said last week that “it still seems too early to anticipate a rise of EUR/USD”, given the likelihood of easing from the European Central Bank and the threats that weigh on the economy of the euro area of potential import duties and u.s. and fiscal problems of the Brexit, and Italy.
At 09.45 am, the euro was at 1,1216 USD, up 0.1% from Tuesday night. The dollar index, which compares the greenback to a basket of peers in developed markets, remained unchanged 97.08.
On Wednesday, Europe will focus again on the pound sterling. The pound reached a new two-year low against the dollar in early trading, in anticipation of a report that should show that the british economy contracted for the first time since 2012.
The british pound has also reached its lowest level in six months against the euro, despite the growing signs that the European Central Bank to any form of easing its monetary policy at its next meeting of the board of governors, at the end of July.
At 9: 45am, the book was 1,2458 USD, an increase compared to its lowest level in the day of 1,2444 USD, and 1,1106 EUR, after diving under the bar 1,1100 for the first time since December.