Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Edges Higher; Dovish Powell Limits Gains

Published 01/15/2021, 03:00 AM
Updated 01/15/2021, 03:01 AM
© Reuters.

© Reuters.

By Peter Nurse

Investing.com - The dollar edged higher Friday after President-elect Joe Biden outlined his plans for additional stimulus, but gains are likely to be limited after Federal Reserve Chairman Jerome Powell declined to join any discussion about reducing monetary stimulus. 

At 4 AM ET (0800 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.267, rebounding from last week’s near three-year low. USD/JPY was down 0.1% at 103.67, while the risk-sensitive AUD/USD was down 0.3% at 0.7753.

Biden released details of his $1.9 trillion spending plan overnight, including more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs.

The proposal has been expected ever since the Democrats won control of the Senate in early January, but questions over how his administration plans to foot the bill has driven Treasury yields higher, supporting the greenback.

Still, gains are limited after Fed Chair Jerome Powell adopted a very dovish tone in a live-streamed interview on Thursday, although he didn't explicitly rule out a tapering of bond purchases toward year-end. The Fed doesn't expect to raise interest rates until 2023 at the earliest.

“Now is not the time to be talking about exit” from the central bank’s easy monetary policies, he said, adding “the economy is far from our goals.”

Last Friday’s jobs report showed the U.S. lost 140,000 payroll positions in December, while the December CPI annual figure advanced 1.4%, still below the 1.7% average over the last 10 years.

The Fed’s low interest rate policy and asset-buying program have weighed heavily on the dollar.

There's an abundance of U.S. economic data to digest later Friday, including December retail sales, PPI and industrial production.

Elsewhere, GBP/USD fell 0.2% to 1.3665 after data showed Britain's economy shrank by 2.6% in November, the first monthly fall in output since April and the country’s initial Covid lockdown. The economy is now 8.5% smaller than it was before the start of the coronavirus pandemic in February.

EUR/USD fell 0.1% to 1.2140, only marginally dipping despite the political turmoil in Italy, the euro-zone’s third largest economy, with the ruling administration under pressure after a small party within the coalition withdrawing its support.

The spillover into the foreign exchange market should be limited, said analysts at ING, in a research note, given “we see limited risk of a material widening in the BTP-Bund spread which is set to benefit from the European Central Bank's heavy purchases.”

Latest comments

The end of free market and the start of Socialism in USA
yes your rightforex trading is a good example.. it has really helped lots of families...and my family is an example
we've had socialism here for a long time. Socialism for the rich, rugged individualism for the poor.
huge tax increases. but it's nice to see someone making a normal speech. we got used to that erratic orange man
really. this is a good beginning.. forex trading has helped and has come to stay...
easy monetary policies resulted in delusional PONZI stock mkt at all time high when the real economy is tanking. this is a dangerous game to play by the stupid fed who is actually manipulating the stock mkt. like a currency manipulator .remove powell  before he further increase a  bubble many times bigger than subprime crisis.
Right
Just be positioned to capitalise on the eventual crash
money $ 765.000
does not dollar index suppose to decrease when government spend 2 trillion dollars:)
I dont want that to happen.. but logical
Biden's tax increases will foot the bill unless the economy crashes first.
Dems will get rid of Powell ( another Trump's dog) very very soon.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.