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Dollar Rally Continues as Rate-Cut Expectations Ease

By Yasin Ebrahim – The U.S. dollar continued to rack up gains against its rivals Wednesday as Federal Reserve Chairman Jerome Powell's second day of testimony did little to support rate-cut hopes.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.25% to 98.84.

In his second day of testimony on Capitol Hill, Jay Powell continued to talk up the strength of the economy and suggested there was little reason for the Fed to cut rates as the economy remained in a good place.

In the run-up to Powell's testimony, investor hopes were running high that Powell would hint at a further stimulus in the wake of the Covid-19 outbreak. The Fed chief, however, said it was too early to determine the virus' impact on the global economy.

About 31% of traders expect at least one cut in June, down from 35% a day earlier, according to's Fed Rate Monitor Tool.

The dollar was held back by the pound, however, as expectations for the next U.K. budget due in March to include a boost to fiscal spending, supporting economic growth eased worries about tricky U.K.-EU negotiations slated for March.

GBP/USD rose 0.15% to $1.2955 and EUR/USD fell 0.33% to $1.0878

USD/CAD slipped 0.30% to C$1.3291 as the loonie firmed on a surge in oil prices as hopes Russia may support OPEC-led proposals to cut production further offset a larger-than-expected build in U.S. weekly crude inventories.

USD/JPY gained 0.24% to Y110.04 on subdued safe-haven demand as investors bet that China's efforts to contain the coronavirus are starting to take shape following a slowdown in infections in Hubei, the province at the epicenter of the outbreak.

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