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

Published 2021-01-14, 09:58 p/m
Updated 2021-01-14, 10:00 p/m
© Reuters.

* 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. 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. 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. 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."

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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

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates

https://tmsnrt.rs/2RBWI5E

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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