After exhibiting strength against most of its peers in the Asian session, the U.S. dollar turned a bit easy against a few major currencies on Tuesday as traders digested Fed Chair Jerome Powell’s Congressional testimony.
The dollar gained early on in the session as U.S. treasury yields rose amid speculation that the central bank will gradually tighten its monetary policy.
Later on in the day, Powell continued to downplay the risks of inflation during testimony before the House Select Subcommittee on the Coronavirus Crisis.
Powell acknowledged inflation has increased notably in recent months but reiterated the view that the jump is due to “transitory” factors and predicted inflation would drop back toward the Fed’s longer-run goal of 2% price growth.
The Fed chief noted the economy has shown sustained improvement since he last appeared before the committee, citing widespread Covid-19 vaccinations as well as unprecedented monetary and fiscal policy actions.
However, he also warned the coronavirus pandemic continues to pose risks to the economic outlook, pointing to the slowing pace of vaccinations and new strains of the virus.
Powell stressed that the Fed will do “everything we can to support the economy for as long as it takes to complete the recovery.”
In economic news today, the National Association of Realtors’ report showed existing home sales extended a recent pullback in May but fell by less than economists had expected. NAR said existing home sales slid by 0.9% to an annual rate of 5.80 million in May after tumbling by 2.7% to a rate of 5.85 million in April. Economists had expected existing home sales to slump by 2.2% to a rate of 5.72 million.
Existing home sales have plummeted by 12.9% since January but are still up by 44.6% compared to May of 2020.
The dollar index, which rose to 92.14, dropped down to 91.65 later on in the day, and was last seen at 91.73, down 0.18% from the previous close.
Against the Euro, the dollar weakened to $1.1939, netting a loss of about 0.16%. The Pound Sterling strengthened to $1.3948 a unit, gaining from $1.3861.
The Yen weakened to 110.68 a dollar, more than a week’s low, dropping from Monday’s close of 110.33.
Against the Aussie, the dollar weakened to 0.7555 from 0.7535.
The Swiss franc lost marginally against the dollar, weakening to 0.9185 from 0.9178.
Against the Loonie, the dollar turned weak, fetching C$1.2308 a unit, compared to C$1.2363 on Monday.