The U.S. dollar climbed higher on Thursday, rebounding from early losses, after Federal Reserve Chair Jerome Powell said the central bank “will not hesitate” to resume raising interest rates if its becomes appropriate.
Participating in a policy panel at the 24th Jacques Polak Annual Research Conference in Washington, D.C., Powell acknowledged that U.S. inflation has slowed over the past year but pointed out it remains well above the Fed’s 2 percent target.
“My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2 percent has a long way to go,” Powell said.
Powell also said the Fed is “not confident” a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time has been achieved.
He added, “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”
Powell indicated the Fed will make future monetary policy decisions “meeting by meeting” based on the totality of incoming data and the implications for the outlook for economic activity and inflation.
Treasury yields surged after the Treasury Department revealed this month’s auction of $24 billion worth of thirty-year bonds attracted below average demand.
The thirty-year bond auction drew a high yield of 4.769% and a bid-to-cover ratio of 2.24, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.38.
In economic news today, first-time claims for U.S. unemployment claims edged down from an upwardly revised level in the week ended November 4th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims slipped to 217,000, a decrease of 3,000 from the previous week’s revised level of 220,000. Economists had expected jobless claims to inch up to 218,000 from the 217,000 originally reported for the previous week.
The dollar index, which dropped to 105.38, rallied to 105.97 after Powell’s remarks.
Against the Euro, the dollar firmed to 1.0669 from 1.0728. The dollar strengthened to 1.2222 against Pound Sterling, recovering well after having weakened to 1.2212 in the Asian session.
Against the Japanese currency, the dollar firmed to 151.36 yen. The Aussie was weak against the dollar at US$0.6365. The dollar was up against Swiss franc, fetching CHF 0.9035 a unit, nearly 0.5% up from the previous close.
The dollar strengthened against the Loonie, advancing to fetch C$ 1.3812 a unit.