Dollar yields pending Powell testimony and monthly jobs data

By Amanda Cooper

LONDON, March 6 (Reuters) – The U.S. dollar was lower on Monday as investors awaited testimony from Federal Reserve Chairman Jerome Powell ahead of the February jobs report later in the week, which should influence price increases. interest rate.

* The dollar index, which measures the performance of the US currency against a basket of six currencies, fell 0.1% to 104.53 points. Last week, the index posted a weekly loss for the first time since January.

* After strong increases last year, the Federal Reserve raised interest rates by 25 basis points at its last two meetings, but a series of favorable economic data has fueled market fears that the central bank will not resumes its aggressive trajectory. .

* Futures indicate a 72% chance that the Federal Reserve will raise interest rates by 25 basis points at its March 22 meeting.

* The focus will be on the February jobs report, due Friday, and Powell’s testimony before Congress on Tuesday and Wednesday.

* In early February, the monthly jobs report for January showed blistering job growth and sustained wage inflation, which was good enough – with good numbers for consumer spending and business activity on the horizon end of the month – to convince investors that the US central bank will have no reason to cut rates this year.

* The dollar has risen around 2% since then, largely at the expense of the Japanese yen, which has lost around 5% in value against the US currency during this period.

* The euro, which has lost about 3% against the greenback since early February, was trading at $1.0637.

* Citi strategists expect Powell to indicate his preference for a 25 basis point hike, but leave all options on the table as he will speak ahead of the jobs data.

* Citi expects payrolls to rise by 255,000 after jumping 517,000 in January. A big upside surprise could lead the Fed to a 50 basis point hike, strategists say.

* The yen fell 0.2% to 136.02 to the dollar ahead of Bank of Japan Governor Haruhiko Kuroda’s latest policy meeting on Friday.

* Elsewhere, the Chinese yuan fell against the dollar after Beijing set a modest 2023 economic growth target of around 5%. The yuan in international markets fell 0.65% to 6.938 units to the dollar.

(Additional reporting by Ankur Banerjee in Singapore; Editing in Spanish by Ricardo Figueroa)