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Dollar retraces as Fed confirms it will not yet raise interest rates

The dollar index was trading at 91.775 during the morning session in Asia

The dollar retreated on Tuesday against other major currencies as Chair of the Federal Reserve Jerome Powell confirmed that a tighter monetary policy was not on the cards anytime soon.

The dollar index was trading at 91.775 during the morning session in Asia, some way off its two-month high of 92.408 at the end of last week.

The dollar has retraced since a week ago when the Fed said that the first interest rate rise could come in 2023.

Both Powell and New York Fed President John Williams have said that the recovery needs time before a tapering of stimulus and higher interest rates are suitable.

“We will not raise interest rates pre-emptively because we fear the possible onset of inflation,” Powell said on Tuesday in a hearing before a U.S. House of Representatives panel. “We will wait for evidence of actual inflation or other imbalances.”

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Attention will now turn to the producer price inflation data in the US, expected on Friday.

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