* Dollar drifts higher
* Traders await UK CPI and Powell testimony
By Tom Westbrook
SINGAPORE, June 21 (Reuters) - The dollar was firmer on
Wednesday leading in to Federal Reserve Chair Jerome Powell's
appearance at Congress where he is expected to strike a hawkish
tone, while sterling lingered below recent peaks ahead of key
inflation data.
British inflation data is due at 0600 GMT, Bank of Japan
Governor Kazuo Ueda is due to speak at 0630 GMT and Powell is
due to begin his testimony before Congress at 1400 GMT.
Sterling fell overnight but recovered about half
its losses to trade steady at $1.2763 through the Asia session,
not far below last week's 14-month high of $1.2849.
Economists expect inflation to show signs of easing and the
data is likely to be decisive for the Bank of England. It meets
on Thursday with markets currently pricing about a 75% chance of
a 25 basis point hike and a 25% chance of a 50 basis point hike.
"Sterling may halt the current reversal (if) expectations
are reshaped, with the pair potentially jumping back above $1.28
and re-testing last week's resistance at $1.2847," said Daniela
Hathorn, analyst at Capital.com.
The euro was held to $1.0914 in Asia trade, while
the yen slipped slightly to 141.80 per dollar as Bank
of Japan minutes and officials stuck to a dovish stance and as
traders turned their focus to the Fed.
"Despite having paused last week, the Fed officials ...
still surprisingly aggressively forecasted another 50 basis
points in hikes by end 2023," said currency analysts at Maybank.
"It is crucial to see whether (Powell) would more strongly
drive home the point that the Fed is serious about another 50
bps of hikes or give the impression that they are 'data
dependent'," they said. "The former may do more to give
additional support to send the dollar index and yields higher."
Elsewhere there was little appetite for a bounce from either
the yuan or the Australian dollar, which have been battered by
China's stalled economic recovery and lack of major stimulus.
China set its yuan midpoint weaker than expected on
Wednesday and the currency slid to a new seven-month
trough of 7.1987 in onshore trade, while the offshore yuan
weakened past 7.2 to the dollar.
The Aussie had taken a further beating thanks to
Tuesday's less-hawkish-than-expected central bank minutes
following this month's rate hike. It fell 0.9% overnight and
last bought $0.6786.
"The path of least resistance is further declines," said
Commonwealth Bank of Australia strategist Joe Capurso.
"The Aussie could dip below 0.6700 this week, particularly
if Powell is hawkish," he said. Powell is due to begin his
testimony at 1400 GMT.
The New Zealand dollar was dragged lower in
sympathy, breaking below its 50-day moving average before
steadying just above its 200-day moving average at $0.6178.
The U.S. dollar index was marginally firmer at
102.60. Bitcoin extended overnight gains to
breach$29,000 for the first time since late May, helped by the
launch of a new crypto exchange backed by Fidelity, Citadel
Securities and Charles Schwab.
========================================================
Currency bid prices at 0548 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
$1.0910 $1.0916 -0.05% +0.00% +1.0923 +1.0911
Dollar/Yen
141.7400 141.4350 +0.26% +0.00% +141.8500 +141.2900
Euro/Yen 154.65 154.43 +0.14% +0.00% +154.8300 +154.3100
Dollar/Swiss
0.8985 0.8979 +0.09% +0.00% +0.8989 +0.8976
Sterling/Dollar
1.2757 1.2763 -0.02% +0.00% +1.2768 +1.2755
Dollar/Canadian
1.3217 1.3235 -0.12% +0.00% +1.3234 +1.3209
Aussie/Dollar
0.6787 0.6787 -0.01% +0.00% +0.6799 +0.6778
NZ
Dollar/Dollar 0.6177 0.6167 +0.17% +0.00% +0.6186 +0.6164
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Tom Westbrook; Editing by Sam Holmes)
Yuan falters, dollar firm ahead of Powell testimony
June 21, 2023 at 01:55 am
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