Dollar edges lower, but set for weekly gain after Powell's speech
Investing.com — The U.S. dollar slipped higher in early European trade Friday, but was heading for healthy weekly gains after Fed Chair Jerome Powell raised the possibility of further rate hikes to combat inflation.
At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged 0.1% lower to 105.727, remaining on course for a gain of almost 1% this week.
The dollar has received a boost after Fed chief Powell warned on Thursday that the U.S. central bank stood ready to hike rates further to combat inflation, if necessary.
"[The Fed] is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time," Powell said.
«We are not confident that we have achieved such a stance. If it becomes appropriate to tighten policy further, we will not hesitate to do so.»
These comments followed similar remarks from a string of other Fed officials, and came a week after the U.S. central bank left interest rates steady and raised expectations that rates could have peaked, causing the dollar to tumble in the aftermath.
Traders still see a high probability of the Fed keeping rates steady when it meets in December for the final time this year, but some are now factoring in the possibility of a rate increase early next year.
The European Central Bank also held interest rates steady at its meeting in late October, and President Christine Lagarde is due to speak later in the session.
EUR/USD edged higher to 1.0667, on track to lose 0.6% this week, with the latest eurozone business activity data, released at the start of the week, suggesting there is a growing chance of a recession in the region by the end of the year.
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