Forex – Dollar Strengthens After Powell Gives Upbeat Assessment of U.S. Economy By Investing.com

Investing.com – The dollar strengthened on Wednesday as Federal Reserve Chairman Jerome Powell presented a  during his semi-annual congressional testimony on Tuesday.

Powell also noted that the central bank is on track to gradually raise interest rate. 

The , which tracks the greenback against a basket of currencies, was up 0.13% to 95.05 on Wednesday.

The dollar hit a six-month high against the yen, as the pair rose 0.1% to 112.97 after going as high as 113.08 earlier in the day, its strongest since January 9, following the upbeat remarks from Powell.

“The dollar stands to gain further, particularly against the yen, with risk aversion in the equity markets petering out,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“And while long-term Treasury yields are not rising prominently, this is a reflection of investor demand for U.S. assets that generates a degree of dollar-buying.”

Powell also noted in his testimony that protectionism could potentially hinder economic growth. “In general, countries that have remained open to trade, that haven’t erected barriers including tariffs, have grown faster. They’ve had higher incomes, higher productivity,” he said. 

In addition, trade concerns “may well” have an impact on wages and capital expenditures, Powell added. “We don’t see it in the numbers yet, but we’ve heard a rising chorus of concern which now begins to speak of actual capex plans being put on ice for the time being,” he said. 

Elsewhere, the pair was 0.14% lower at $0.7381, extending the retreat from Tuesday when it lost 0.45% against a broadly stronger greenback.

The yuan was little changed against the dollar, as the pair slipped 0.02% to 6.7065 on Wednesday.