Powell ended his by reiterating that US interest rates could rise at least two more times this year to contain high inflation.
His comments came after twice what markets had expected, raising fears that the world’s main central banks were far from finished with their rate-raising cycles, given persistent levels of inflation.
Rising interest rates in the West bode ill for Asian currencies as the gap between risky and low-risk returns narrows. Most regional units fell for that notion.
The was among the worst performers of the day, falling 0.7% along with sharp losses in commodity prices. Data released on Friday showed some improvement in Australian business activity through June, although it was still in contraction.
Rate-sensitive currencies lost 0.3%, while Southeast Asian currencies fell the most, losing 0.6%. Still, regional trade volumes were somewhat reduced due to a holiday in the Chinese market.
Dollar Strengthens, Fed Speakers Expected
Fears of a rate hike in the West boosted demand for the dollar, adding 0.2% each in Asian trade.
Powell’s comments also triggered flows into the dollar, as markets began pricing in a nearly 75% chance that the Federal Reserve would raise rates further in July.
The focus is now on a host of speakers from the Fed later in the day, and for more clues on monetary policy.
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