Dollar Up, Takes “Wee Breath” Ahead of Powell’s Congress Testimony By Investing.com

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By Gina Lee

Investing.com – The dollar was up on Tuesday morning in Asia. The greenback hit pause as investors await testimony from U.S. Federal Reserve Chairman Jerome Powell after being caught off-guard by the .

The that tracks the greenback against a basket of other currencies inched up 0.04% to 91.922 by 12 AM ET (4 AM GMT).

The pair edged up 0.11% to 110.42.

The pair was down 0.26% to 0.7515 and the pair edged down 0.14% to 0.6976.

The pair inched down 0.02% to 6.4645.

The pair inched down 0.10% to 1.3914. Investors await a further re-opening of the U.K. economy on Jul. 19 as well as a , to be handed down on Thursday.

The U.S. currency has climbed sharply ever since the previous week’s Fed decision, which hinted that interest rate hikes and asset tapering could come sooner than expected. It gave up some of those gains on Monday as it dipped, however.

“We’ve had a meaningful shift at the Fed from a longtime dovish stance to now a slightly hawkish one… we’ve had a bit of a positioning cleanout, the whole world was mega short the dollar and that’s in good part probably been cleaned out already, and now we take a wee breath before the next move up,” Westpac currency analyst Imre Speizer told Reuters.

Investors will now focus on the U.S. labor market, whose performance will likely influence the Fed’s next moves. They also await Powell’s testimony before a House of Representatives subcommittee hearing later in the day.

However, sustained labor market improvement and the recent increase in inflation in written remarks ahead of his testimony.

Other Fed officials, including St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan, also offered toned-down rhetoric. However, New York Fed President John Williams (NYSE:) warned it was too soon to shift policy as he expects inflation to ease from about 3% in 2021 to around 2% in 2022 and 2023.

Some investors were unsure of Williams’ prediction, however.

“The Fed is nearly always late on such things,” with core inflation potentially higher at just under 3% by the end of 2022. “That is not 2% inflation,” with the Fed eventually feeling the pressure to move on interest rates, RBC Capital Markets chief economist Tom Porcelli said in a note.

“In the meantime, we have no doubt with that 2% forecast as cover, Powell will attempt to play down the likelihood of a rate hike in 2022. But just as he eventually relented on taper talk, he will relent on dismissing talk about hiking rates too. Just give it more time,” the note added.

In cryptocurrencies, bitcoin and its rivals slumped on Monday in reaction to an intensifying crackdown on trading and mining in China in addition to technical factors.

“The tides of FONGO, or fear of not getting out, are creeping in,” Pepperstone head of research Chris Weston told Reuters.

” is also at a make-or-break point” as it tests May’s low of near $30,000. ” looks plain ugly and if crypto is an emotive asset, then one would have to be the staunchest of hodlers to be holding this and not look for some sort of hedge,” he added.