The dollar rose from a three-week low on Wednesday but traded within narrow ranges as investors showed no inclination to make big bets a day after Federal Reserve Chairman Jerome Powell emphasized patience on raising U.S. interest rates.
The greenback’s outlook, however, remained negative as money markets have ruled out any more rate hikes for the remainder of the year with an 80-percent probability of a rate cut by early 2020.
Powell was on the second day of his two-day appearance in the U.S. Congress. He repeated the testimony delivered to a Senate panel on Tuesday, in which he said the Fed will remain “patient” in deciding on further interest rate hikes.
“The tone of the Fed doesn’t give much impetus for the dollar to outperform. Overall, the dollar has been mostly rangebound,” said Mazen Issa, senior FX strategist, at TD Securities in New York.
The dollar, however, benefited modestly from some safe-haven bids after U.S. Trade Representative Robert Lighthizer said U.S. issues with China are “too serious” to be resolved. He added that promises from Beijing to purchase more U.S. goods and any deal between the two countries must include a way to ensure commitments are met.
Lighthizer made the remarks in a Congressional hearing on Wednesday.
In late morning trading, the dollar index, a measure of the U.S. currency’s value, was up 0.1 percent at 96.058, after earlier falling to a three-week low.
The euro was little changed against the dollar at $1.1388, while the dollar rose 0.2 percent versus the yen to 110.825.
U.S. economic data were mixed overall on Wednesday, backing expectations that the Fed will be on hold throughout the year.
The safe-haven yen and Swiss franc earlier gained after Pakistan shot down two Indian jets, sending investors out of riskier markets and into safer assets.
The Japanese and Swiss currencies both tend to appreciate during bouts of political and economic uncertainty. Pakistan said it downed the planes a day after Indian warplanes struck inside its territory for the first time since a war in 1971.
Elsewhere, investors watched sterling closely as it rose above $1.33 for the first time in five months.
The pound rallied on Tuesday after British Prime Minister Theresa May offered lawmakers the chance to vote on delaying Brexit, raising the chance of avoiding a chaotic no-deal departure from the European Union.
