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Dollar Up, Investors Await Powell, Yellen Congressional Testimony

Forex39 minutes ago (Mar 23, 2021 12:32AM ET)

(C) Reuters.

By Gina Lee – The dollar was up on Tuesday morning in Asia but just below recent highs as investors gauge how far top U.S. policymakers will allow U.S. bond yields to climb.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.12% to 91.847 by 12:26 AM ET (4:26 AM GMT).

The USD/JPY pair inched down 0.09% to 108.73.

The AUD/USD pair was down 0.44% to 0.7710 and the NZD/USD pair fell 0.98% to 0.7092. The NZD fell against major currencies after the government introduced steps to rein in soaring property prices, which dampened speculation that the Reserve Bank of New Zealand would raise interest rates.

The USD/CNY pair inched up 0.04% to 6.5098 and the GBP/USD pair edged down 0.13% to 1.3845.

The dollar index has gained 2% so far during the first quarter of 2021, boosted by the rollout of COVID-19 vaccines in the U.S. and the signing of a $1.9 stimulus package into law earlier in the month. Hopes for economic recovery also drove U.S. bond yields up and drew investors to the greenback.

Also adding to the dollar’s attraction was the U.S. Federal Reserve’s recent, perceived tolerance of rising bond yields.

“U.S. bond yields could rise further as the market may try to find out where the pain threshold for the Fed is,” MUFG Bank chief currency analyst Minori Uchida told Reuters.

Ten-year U.S. bond yields eased to 1.684% after climbing up to 1.754% during the previous week.

Investors will be focused on the joint congressional testimony by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen later in the day.

“The market is interested in how far U.S. bond yields will rise. While top Fed officials have said they will keep interest rates low through 2023, there could be dissenting voices,” Daiwa Securities senior strategist Yukio Ishizuki told Reuters.

Investors also looked to the U.S. Treasury’s auctions of two-, five- and seven-year debt later in the week.

Meanwhile, the Turkish lira traded at 7.7980 per dollar, regaining some stability after Monday’s steep 7.5% dive. The dive came after President Recep Tayyip Erdogan replaced hawkish central bank governor Naci Agbal with Sahap Kavcioglu on Saturday.

However, investor confidence in emerging market currencies was little shaken by Erdogan’s firing of his third central bank governor since 2019, which was considered to hold no wider risk.

In cryptocurrencies, bitcoin was at $54,549 after falling almost 5% on Monday to trade near the previous week’s low of $53,221.

Dollar Up, Investors Await Powell, Yellen Congressional Testimony

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