Tom Westbrook

SINGAPORE, (Reuters) – The dollar was near a five week high Thursday after Jerome Powell, the chair of Federal Reserve, urged investors to expect U.S. rate increases beginning in March.

Powell predicted a long-term battle against inflation.

According to him, there is “quite some room to increase interest rates without threatening to the labour market”, and that the Fed would be open to raising rates as early as March.

After Powell’s remarks and the Fed decision, the dollar rose 0.7% against yen. It was the steepest daily rise in two months. Stock markets were scared by the possibility of future hikes and this caused bond yields to climb higher.

Early in the Asia session, the yen fell to 114.74 dollars.

Also, the euro fell 0.5% overnight to $1.1235, a 5-week low. It is currently at this level in Asia.

The mood also saw sterling and Australian dollars drop, while the New Zealand Dollar fell to its lowest level since Nov. 2020.

“While communication from Fed members in the lead-up to this meeting meant that the pivot should not have been a surprise, risk appetite shrivelled as Powell’s press conference progressed and the extent of the Fed’s commitment to act in the face of significant inflation pressure became clear,” said ANZ analysts.

After falling close to the 2022 level overnight, the Australian dollar recovered a bit to $0.7119. To reach $0.66393, the Australian dollar posted its fifth straight daily loss. Early trade saw both Antipodeans stabilize. [AUD/]

Sterling hovers around $1.3469 while investors wait for a Bank of England meeting next Wednesday and keep an eye on political turmoil surrounding Prime Minister Boris Johnson who has been under increasing pressure following attending parties during lockdowns.

Data showed that New Zealand’s inflation was slightly higher than expected and at an all-time high of three decades.

The data on Chinese industrial profits will be available later today, along with the U.S. figures for economic growth and unemployment.

After last week’s turmoil, crypto currencies held firm in the aftermath of Fed’s meeting. Last time bitcoin was bought, it cost $35,869.

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Devise bid prices starting at 0006 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Previous changes

Session

Euro/Dollar

$1.1242 $1.1243 +0.00% -1.11% +1.1242 +1.1236

Dollar/Yen

114.7450 114.6800 +0.01% -0.28% +114.7700 +114.6900

Euro/Yen

129.00 128.91 +0.07% -1.02% +129.0100 +128.8600

Dollar/Swiss

0.9239 0.9243 -0.03% +1.30% +0.9243 +0.9240

Sterling/Dollar

1.3465 1.3465 +0.00% -0.44% +1.3467 +1.3465

Dollar/Canadian

1.2663 1.2663 +0.02% +0.17% +1.2670 +1.2659

Aussie/Dollar

0.7116 0.7115 +0.01% -2.10% +0.7121 +0.7113

NZ

Dollar/Dollar 0.6657 0.6654 +0.04% -2.75% +0.6660 +0.6646

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