Asian session review: the dollar declined slightly against major currencies

During today's Asian trading, the US dollar traded steadily against the euro and the yen, but fell against the pound and the Australian dollar.

"The dollar has been strengthening recently against the background of fundamental changes in politics and the economy, which showed traders that they were on the wrong side," notes IGM currency market analyst Bruce Clark.

Dollar sales "were popular at the beginning of 2021," when everyone expected major stimulus measures from the new US President Joe Biden, as well as keeping the base rate by the Federal Reserve System at close to zero for another couple of years, the expert says. "However, the prerequisites for the sale of the dollar began to crumble this summer, when it became clear that the implementation of the Biden agenda was in jeopardy, and it is becoming increasingly obvious that the Fed was somewhat mistaken with inflation forecasts," Clark said.

Fed Chairman Jerome Powell said on Wednesday that high inflation in the US could persist into early next year - longer than expected due to a shortage of components and commodities. At the same time, he expressed confidence that the increase in inflation in the United States is due precisely to the recovery of economic activity after the COVID-19 pandemic, and such an inflationary regime will not continue in the future. Powell, however, repeated the words that the Fed will raise the base interest rate if "a significant increase in inflation will cause serious concerns."

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.05%, but remained near the highest level for the year.