The dollar eased on Tuesday after its rally the previous day, but still hovered near a one-month peak as traders raised their bets on how high the U.S. Federal Reserve would need to raise interest rates to tame inflation.
"He has the chance to walk back some of the commentary that he made on Wednesday last week that prompted this dovish read," said Simon Harvey, head of FX analysis at Monex, but added that he does not expect any new messaging from Powell., which showed that nonfarm payrolls surged to 517,000 in January, pointing to a resilient labour market.
The dollar index , which measures the greenback against a basket of six rivals, made a brief breach of Monday's one-month highs, and was last trading at 103.52, roughly flat on the day."Markets were really caught long on this whole risk-on move that was occurring at the beginning of the year," said Monex's Harvey.
U.S. interest-rate futures show that markets are expecting the Fed funds rate to peak just above 5.1% by June, compared with expectations of a peak below 5% prior to Friday's jobs report. Investors are looking for further commentary from central bankers this week following what was viewed as a dovish outcome of Bank of England's meeting last week.
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