U.S. Dollar Extends Gain On Fed Chairman Powell's Rate Hike Comment

(RTTNews) - The U.S. dollar extended its early gain against other major currencies in the Asian session on Wednesday, as traders sentiment bolstered after Federal Reserve Chair Jerome Powell signaled that interest rates would likely remain higher for longer than previously expected, to fight inflation.

Powell said in his testimony before the Senate Banking Committee that the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.

Additionally, the Fed chief reiterated the central bank will likely need to maintain a restrictive stance of monetary policy for "some time" in order to restore price stability.

Traders bet on anticipation of a 50-basis point increase in the federal funds target rate in March. Powell's second day of testimony on Capitol Hill may attract some attention, due later in the day.

Meanwhile, the Asian stock markets traded lower in the day following Powell's testimony.

In the Asian session today, the U.S. dollar rose to more than a 2-month high of 1.0532 against the euro and nearly a 4-month high of 1.1811 against the pound, from yesterday's closing quotes of 1.0549 and 1.1824, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.02 against the euro and 1.16 against the pound.

Against the Swiss franc and the yen, the greenback advanced to a 6-day high of 0.9435 and nearly a 3-month high of 137.75 from Friday's closing values of 0.9419 and 137.14, respectively. The greenback may find resistance around 0.96 against the franc and 139.00 against the yen.

Against the Australian and New Zealand dollars, the greenback climbed to near 4-month highs of 0.6570 and 0.6086 from yesterday's closing quotes of 0.6583 and 0.6106, respectively. The next resistance level for the greenback is seen around 0.63 against the aussie and 0.58 against the kiwi.

The greenback rose to more than a 4-month high of 1.3772 against the Canadian dollar. from yesterday's closing value of 1.3753. The greenback may find its resistance around the 1.39 level.

Looking ahead, Germany retail sales and industrial production for January are due at 2:00 am ET.

At 5:00 am ET, Eurozone revised GDP for the fourth quarter is due.

In the New York session, reports on ADP employment change, the Fed's Beige Book, U.S. weekly crude oil inventories data and trade data for January are due.

Canada trade data for January is set to release at 8:30 am ET.

At 10:00 am ET, Bank of Canada's rate decision is slated for release. Economists expect the Bank of Canada to hold its interest rate at 4.50 percent.