Written by Brigid Riley
TOKYO (Reuters) – The U.S. dollar was mostly stable on Wednesday as traders avoided big bets ahead of Federal Reserve Chair Jerome Powell’s testimony to Congress, the European Central Bank interest rate decision later this week and the U.S. jobs report. Was.
Among cryptocurrencies, Bitcoin rose slightly, but remained below its record high in volatile overnight trading.
The dollar fell overnight on data showing growth in the U.S. services industry slowed slightly last month, but a lack of catalysts kept it within a narrow range.
February’s U.S. jobs report, to be released on Friday, will be a test of the interest rate outlook, and any unexpected upside could jolt the market.
Traders are also awaiting Fed Chair Jerome Powell’s first day of testimony to Congress on the state of the U.S. economy, where he is expected to reinforce that the Fed will wait for more data before cutting rates.
Commonwealth Bank of Australia currency strategist Carol Conn said the Fed chief could echo comments that strong core inflation in January did not significantly change the central bank’s outlook.
“Reiterating this message is unlikely to change the current market pricing of the FOMC’s rate cutting cycle starting in June, so the impact on the USD will be limited.”
According to the CME FedWatch tool, the market has priced in a roughly 60% chance of a June rate cut.
The dollar index, which measures the dollar’s strength against a basket of six currencies, is hovering around 103.84.
The euro fell 0.1% to $1.0846 as traders braced for the ECB’s interest rate decision later on Thursday.
The central bank is expected to keep interest rates on hold at a record high of 4%, with focus on clues about when it will begin cutting rates and updates on the economic outlook.
Charu Chanana, head of currency strategy at Saxo, said he did not expect the ECB to send a clear dovish message after euro zone inflation fell less than expected last month. .
“Still, inflation is likely to be revised downwards, which poses some downside risk to the euro, but given the economy is stabilizing, it remains a bull buy.”
Business activity in the euro zone showed signs of recovery in February, according to a survey on Tuesday.
Sterling fell 0.08% to $1.2696 ahead of Wednesday’s UK budget announcement.
The Australian dollar hovered around $0.6502 after gross domestic product (GDP) data showed economic growth was just 0.2% in the fourth quarter, strengthening the case for a rate cut.
Kiwis fell 0.1% to $0.6081.
The dollar was almost flat against the yen at 150.04 yen, after falling overnight from last week’s high of 150.85 yen.
Markets are also focused on Bitcoin, the world’s largest cryptocurrency, which soared to record highs overnight before falling sharply.
It was last up 0.15% at $63,414, the sharpest rebound since October as investors poured money into U.S. spot-traded crypto products on expectations that global interest rates could fall. However, I took a breather.
(Reporting by Brigid Riley; Editing by Sri Navaratnam)
