Kevin Buckland

TOKYO, Reuters – On Wednesday the dollar fell to its lowest level since November. Federal Reserve Chair Jerome Powell stated that it could take many months for a decision to reduce the $9 trillion central bank balance sheet.

Powell stated that the U.S. would be ready to accept higher interest rates and an offsetting of assets. This was referred to as quantitative tightening, or QT. It is intended to reduce inflation. However, he stated that Fed policymakers still debated ways of reducing its balance sheet and suggested it may take up to four meetings before they can make decisions.

Powell was less optimistic than his coworkers, which helped to calm market concerns about a sudden end of monetary support.

Raphael Bostic (Atlanta Fed President) stated that Monday’s high inflation and strong recovery justified a quick rundown in Fed asset holdings.

In the Asian session, the, which compares the greenback to six major peers, fell to 95.563, its lowest level since Nov. 30,

In a note to clients, Chris Weston from Pepperstone’s research department wrote that Powell did not push back against market pricing for Fed rate increases, but that he had “tried and remove a belief they are stuck on an established path.”

He said that “Risk is buoyant” which weighed on the dollar as well as the safe-haven Japanese yen.

U.S. consumer inflation data will be available later in the day. The headline CPI figure for the year is a record-breaking 7%, which makes it more probable that rates could rise sooner than expected.

The Australian dollar is often seen as a proxy for risk appetite and reached its highest level in nearly a week, at $0.7216.

The Sterling was up to $1.3641, the highest level since Nov. 4.

At $1.1371, the euro was trading near the peak of its past range. The euro would be at its highest point since mid November if it rose above $1.1387.

The dollar was able to recover against the yen, however, at 115.310 after falling from 115.045, the previous week’s low, one week ago.