- Powell sticks to message of ultra-easy policy for some time yet
- Recovery hopes boost commodity currencies and British pound
- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
The safe-haven U.S. dollar languished near three-year lows versus riskier currencies on Thursday as continued dovish signals from the Federal Reserve stoked reflation bets.
The greenback sank to a fresh low against the Australian dollar, and held near lows set overnight against its British, Canadian and New Zealand peers.
Fed Chair Powell reiterated on Wednesday that the central bank wouldn't adjust policy until the economy is clearly improving, and will look through any near-term spike in inflation. The remarks to the House of Representatives Committee on Financial Services mirrored his testimony before the Senate the day before.
"Powell made it very clear that the improvement in the economic outlook thus far will not instigate the Fed to tighten monetary policy," National Australia Bank foreign exchange strategist Rodrigo Cattrill wrote in a client note.
"The punch bowl ain’t going anywhere anytime soon and the policy backdrop should remain supportive for risk assets for some time."
Easy financial conditions, the promise of fiscal stimulus and an accelerating COVID-19 vaccine rollout have driven money into what's come to be known as the reflation trade, refering to bets on an upswing in economic activity and prices.
Commodity-linked currencies are placed to benefit from a pick-up in global trade, while investors have also cheered Britain's progress in recovering from the coronavirus pandemic.
Australia's dollar AUD=D4 rose 0.1% to $0.79717 on Thursday in Asia after earlier touching a fresh three-year high of $0.7975.
The New Zealand NZD=G4 and Canadian dollars CAD=D4 traded just off Wednesday's multi-year highs.
Sterling GBP=D4 was little changed at $1.4143 after pushing to the cusp of $1.43 overnight for the first time since April 2018.
The euro EUR=EBS traded near the top of its recent range at $1.2168, near the almost one-month high of $1.2180 touched earlier this week.
The dollar strengthened though against other traditional safe haven currencies, rising 0.1% to 105.94 yen JPY=EBS for a third day of gains. It held near the three-month high of 90.945 Swiss francs CHF=EBS reached overnight.
======================================================== Currency bid prices at 010 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.2166 $1.2170 -0.03% -0.43% +1.2172 +1.2140 Dollar/Yen JPY=D3 105.9620 105.8600 +0.00% +2.49% +105.9670 +0.0000 Euro/Yen EURJPY= 128.92 128.79 +0.10% +1.58% +128.9400 +128.7900 Dollar/Swiss CHF=EBS 0.9068 0.9065 +0.03% +2.50% +0.9070 +0.9065 Sterling/Dollar GBP=D3 1.4144 1.4143 +0.01% +3.54% +1.4146 +1.4131 Dollar/Canadian CAD=D3 1.2510 1.2515 -0.02% -1.74% +1.2519 +1.2510 Aussie/Dollar AUD=D3 0.7973 0.7968 +0.08% +3.66% +0.7977 +0.7960 NZ NZD=D3 0.7439 0.7443 -0.05% +3.59% +0.7447 +0.7433 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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