The dollar is trading flat during the early part of Thursday’s session, following the losses of Wednesday that followed the testimony of Jerome Powell to the US Congress. Speaking in front of lawmakers, the chairman of the Federal Reserve reiterated his conviction that inflationary pressures are only temporary, despite the 5.4% spike in consumer prices recorded in June, which was the largest since 2008. The speculation over the timing of the Fed’s tapering has been the main driver behind the performance of the dollar over the last few months, with the markets constantly pricing in the latest development. This was particularly noticeable on Tuesday, when the Dollar Index gained more than 0.5% after the inflation data was released, only to cancel most of those gains yesterday, following Powell’s dovish comments.
Ricardo Evangelista – Senior analyst, ActivTrades