The dollar fell broadly as investors anticipated Federal Reserve Chair Jerome Powell's testimony before Congress, along with the February job report set to be released at the end of the week, which is likely to influence the central bank's interest rate decision. The dollar index, which measures the performance of the U.S. currency against six major currencies, decreased by 0.182% to 104.420. The index experienced its first weekly loss since January last week.
After significant increases in U.S. interest rates over the past year, the Federal Reserve raised rates by 25 basis points in its latest two meetings. However, a series of strong economic data has heightened market fears that the bank may revert to aggressive rate hikes. Attention now turns to the February job report scheduled for release on Friday and Powell's testimony before Congress on Tuesday and Wednesday.
Strategic analysts at Citi expect Powell to signal a preference for a 25 basis point rate hike but will keep all options on the table, as he will speak before job data is released. They anticipate an addition of 255,000 jobs after January’s notable increase of 57,000, adding that a substantial increase could lead to a 50 basis point rate hike.
The euro rose by 0.07% to $1.0641 after increasing by 0.8% last week, while the pound reached $1.2029 in recent trading, down 0.09% for the day. The Japanese yen also gained 0.10% to 135.74 yen to the dollar ahead of Bank of Japan Governor Haruhiko Kuroda's final monetary policy meeting on Friday.
The Chinese yuan declined today after China announced a modest economic growth target of around 5% for 2023. In the spot market, the yuan started trading in offshore markets at 6.9072 yuan to the dollar and reached 6.9137 in the latest transaction. The Australian dollar fell by 0.21% to $0.675, and the New Zealand dollar decreased by 0.16% to $0.621 in the latest trading.
