By Peter Nurse
Investing.com – The US dollar rose in early European trading on Tuesday, but traded just above a seven-month low as investors waited for remarks from Fed Chairman Jerome Powell to get more Clarity on the central bank’s cycle of interest rate hikes.
As of 03:15 ET (0815 GMT), the , which tracks the greenback’s performance against six other currencies, was up 0.2% to hit 102.960, after falling to a seven-month low of 102.93. in the previous session.
The dollar has come under some pressure following data released on Friday, as the dollar signaled a slowdown in wage growth, as well as the first contraction in US service sector activity in more than two years.
This has raised hopes that he will tone down his aggressive monetary tightening policy at his next meeting, scheduled for early February.
Federal Reserve Bank of San Francisco President Mary Daly said Monday the central bank could raise rates by 50 basis points for the second time in a row or slow to 0.25 growth.
“Doing it more gradually gives you the ability to respond to information coming in,” Daly said. To this he added that he expects the central bank to raise interest rates to some point above 5% before pausing.
He is scheduled to speak at a banking symposium in Sweden on Tuesday, where he could provide more clarity on the pace of rate hikes before US rates are released on Thursday.
Elsewhere, the pair rose 0.1% to 1.0741, near the previous session’s seven-month high of 1.0760, helped by French industrial production which rose 2.0% m/m in november.
This was better than expected growth of 0.8% and a healthy improvement from the previous month’s revised 2.5% drop, raising hopes that the Eurozone slowdown in 2023 could be more slighter than initially feared.
The fell 0.1% to 1.2170, after hitting a three-week high of 1.2209 on Monday. There was also positive economic news from the UK, with retail sales last month rising 6.5% compared to the same period a year ago, according to data from the British Retail Consortium and KPMG.
The yen rose 0.1% to 132.00, and the yen fell despite data showing inflation in Tokyo rose more than expected in December, increasing pressure on the Bank of Japan to tighten its monetary policy in the near future.
The rose 0.1% to 6.7811 and the Chinese yuan traded near a four-month high after China eased most anti-dumping measures and reopened its international borders, while the pair rose 0.1 % up to 0.6902.