By Scott Kanowsky
Investing.com — The U.S. dollar touched a 20-year high against a basket of major currencies on Monday, as investors digest a pledge from Federal Reserve chair Jerome Powell to keep interest rates higher in a bid to bring down surging inflation.
As of 02:44 ET (06:44 GMT), the was trading at 109.26, pulling back from a new two-decade peak of 109.48 hit earlier in the trading session.
The greenback’s counterparts in Asia slid. The also hit a new two-year low of $6.9321, while the Japanese dropped to 138.88 compared to the dollar.
Meanwhile, the decreased to $0.6858 and the fell to $0.6109.
The moves come after said at a closely-watched central bank symposium in Jackson Hole, Wyoming that the Fed has no plans for a dovish change in its rate policy and will continue to raise borrowing costs.
He also warned that U.S. economic growth may be dented by higher rates, saying households and businesses may face “some pain” before soaring are corralled.
Powell’s comments spurred on that the Fed will hike borrowing costs by 75 basis points in September and that rates will end the year well above 3%.
The focus now shifts to data due out on Friday. A strong labor market report may give the Fed additional room to maintain its current pace of monetary policy tightening.
Elsewhere, the euro’s brief foray above dollar parity lost steam, with the exchanging hands at $0.9944 in morning European trading. The euro had been lifted late last week on reports that the European Central Bank may also discuss by as much as 75 basis points at their next meeting in September.
But concerns remain about the bloc’s ability to weather a looming energy crisis brought on by unscheduled maintenance of a key gas supply line out of Russia this week. Gazprom (MCX:), the Moscow-backed energy giant, is expected to stop flows of natural gas to Europe via the crucial Nord Stream 1 pipeline between August 31 and September 2.
Finally, in cryptocurrencies, traded down 1.16% at $19,821 as investor sentiment for riskier assets waned in the wake of Powell’s statement.
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