Dollar in demand ahead of eagerly awaited Powell speech
Investing.com — The U.S. dollar edged higher in early European trade Wednesday, picking up ahead of a key speech from Fed Chair Jerome Powell later in the session.
At 03:20 ET (07:20 GMT), the US Dollar Index, which tracks the greenback against a basket of six other currencies, climbed 0.2% to 105.587, rebounding from the near two-month low of 104.84 seen earlier in the week.
The dollar index is currently on course for a weekly gain, reversing last week’s hefty decline, after a slew of Federal Reserve speakers left the door open to further rate hikes to combat inflation.
The greenback had seen its steepest weekly decline since mid-July last week after the Federal Reserve offered up dovish signals on the likelihood for more interest rate hikes this year, followed by the release of a weak monthly jobs report.
Traders are now looking to a speech from Fed chief Jerome Powell later in the session for guidance on the central bank's future policy path.
“The tightening of financial conditions in mid-October prompted remarks such as the 'term premium is doing the tightening',” said analysts at ING, in a note. “Now that these financial conditions have fully reversed that October spike, the Fed will presumably want to re-emphasise the risk of further rate hikes.”
EUR/USD fell 0.2% to 1.0677, ahead of the release of the eurozone retail sales data for September, which is expected to show an annual drop of 3.1%, as consumers continue to struggle.
Data on Tuesday showed German industrial production fell more than expected in September, further illustrating the darkening growth outlook in the eurozone.
However, the International Monetary Fund said earlier Wednesday that the ECB should hold its key deposit rate close to its record high
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