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Elshinta.com – The dollar strengthened at the start of the Asian session on Wednesday morning, catapulting to a three-month high after Federal Reserve Chairman Jerome Powell surprised investors by warning that interest rates may need to rise faster and higher than expected to control inflation.

dollar broke above the 200-day moving average against the yen for the first time this year in Asian trading, hitting its highest level since mid-December at 137.49 yen. Overnight, the dollar had climbed 1.2% against the euro, its biggest one-day move in five months. It last traded at $1.0550 per euro.

The Aussie dollar took a bigger dip on the stance falcon Powell contrasted with a softened tone from Australia’s central bank, sending the Aussie down $2.0 overnight to a four-month low of $0.6580. The U.S. dollar index, which measures the dollar against a basket of six other major currencies, jumped 1.3% overnight to hit a three-month high of 105.65.

“The latest economic data is stronger than expected,” Powell told lawmakers on Capitol Hill, “suggesting that the final interest rate will likely be higher than previously thought.

“If all the data indicates that more rapid tightening is needed, we will be ready to accelerate the pace of rate hikes,” he said.

The remarks have boosted expectations for short-term rates, with traders now pricing in nearly a 70% chance of a 50 basis point rate hike in March, according to CME’s FedWatch tool, from around 30% a day ago. Futures markets imply U.S. interest rates will peak above 5.6% and hold above 5.5% through 2023. Traders are now focusing on US payroll data. US Friday (03/10/2023) and next week’s inflation numbers.

“If the data print beats expectations at all, from what Powell said, that should be enough to justify a 50 basis point gain in March,” IG Markets analyst Tony Sycamore told Reuters. Sidney.

“If the hot data comes in February and March, the US dollar will have a very strong tailwind behind it.”

The pound fell 1.7% overnight to its lowest level since late November and last stabilized at $1.1832. The New Zealand Dollar fell 1.5% on Tuesday (03/07/2023) and fell slightly in morning trade to hit a nearly four-month low of $0.6104.

Sunday blockbuster movie a meeting of central bankers and central bank presidents will take place later in the day, with Canada’s central bank setting policy and European Central Bank President Christine Lagarde. Canada’s central bank is expected to keep interest rates steady as it grapples with the damage that rising rates will do to the economy, which has the currency at a four-month low of 1.3262 for a American dollar.

“If Canada’s central bank were to raise interest rates, it would likely add to concerns about the housing crash,” said Deutsche Bank strategist Alan Ruskin.

“If they don’t rise, the Canadian dollar will likely fall into a basket of currencies where central banks are unwilling to follow the Fed.”