Dollar rebound falters as Fed's Powell strikes dovish tone

Friday,   15-Jan-2021   09:37 AM (IST)

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. The dollar index 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." The central bank's asset-buying program has weighed on the dollar as it increases supply of the currency, diminishing its value. The dollar was little changed at 103.76 yen after slipping 0.1% overnight. The euro eased 0.1% to $1.21465, on track for a three-day decline. The riskier Aussie dollar slid 0.1% to 77.650 U.S. cents, tempering the previous session's 0.6% rise.