Dollar near one-week lows as pound jumps

The dollar held near a one-week low against its rivals on Tuesday as currency markets waited for testimony from Fed Chairman Jerome Powell that might give a further boost to risk appetite.

Risky assets had a strong start to the week with the Chinese currency hitting a seven-month high on Monday after U.S. President Donald Trump confirmed he would delay a planned hike in tariffs on Chinese imports.

Powell will testify before the Senate Banking Committee later on Tuesday, the first day of a two-day appearance before lawmakers.

Market watchers expect him to underline the Fed’s sensitivity to asset prices and deliver an upbeat assessment of domestic growth prospects.

“Powell’s comments should bolster an already improving market for risk appetite and we remain constructive on risk,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.

Against a basket of other currencies, the dollar was broadly steady at 96.43 after hitting its lowest level in a week at 96.31 in Asian trading.

Powell and other Fed policymakers have indicated they favoured patience before raising key lending rates again due to recent signs of slowing economic growth.

The futures market implies traders are betting the central bank will not raise interest rates at all in 2019.

Improving risk appetite was more evident in the British pound after Bloomberg News reported that British Prime Minister Theresa May was considering delaying the March 29 deadline for the UK’s exit from the European Union.

The pound was last up half a per cent on the day at 1.3152 dollar and it gained by a similar amount against the euro to 86.30 pence.

The Sun newspaper also reported May will propose formally ruling out a “no-deal” Brexit scenario which could potentially lead to a delay in the UK’s exit from the EU by months.

The euro was broadly flat at 1.1363 dollar after advancing 0.2 per cent on Monday. (Reuters/NAN)