2021.11.3021:05:00UTC+00Dollar Rebounds From Early Lows After Powell's Comments On Policy Tightening

The U.S. dollar drifted lower in the Asian session on Tuesday and shed further ground subsequently before briefly rebounding above the flat line a little before noon after the Fed Chief indicated the central bank would discuss accelerate the pace of tightening its policy.

However, the greenback retreated soon and kept sliding gradually as the day progressed, with traders weighing the likely impact of the Omicron variant of the coronavirus on the global economy.

Federal Reserve Chairman Jerome Powell indicated the central bank could hasten a tightening of monetary policy.

Powell told the Senate Committee that he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion a month schedule announced earlier this month.

Powell's comments suggesting accelerated tapering comes as he told the Senate Banking Committee the recent surge in new Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.

Traders also reacted to the latest batch of economic reports. MNI Indicators released a report today that showed a slowdown in the pace of growth in Chicago-area business activity in the month of November.

The report said the Chicago business barometer slid to 61.8 in November from 68.4 in October, although a reading above 50 still indicates growth. Economists had expected the business barometer to edge down to 67.0.

Meanwhile, the Conference Board's report showed consumer confidence deteriorated in the month of November. The Conference Board said its consumer confidence index fell to 109.5 in November from a downwardly revised 111.6 in October. Economists had expected the index to dip to 110.7 from the 113.8 originally reported for the previous month.

Moderna's CEO Stephane Bancel expressed apprehensions about the effectiveness of existing vaccines against the newly identified Omicron variant.

Bancel said in an interview to the Financial Times that it will take a couple of weeks to determine how much the mutations have affected the efficacy of the vaccines currently available in the market.

The dollar index, which climbed to 96.64 from a low of 95.52, is hovering around 95.90, down nearly 0.5% from the previous close.

Against the Euro, the dollar is trading at $1.1339, compared to $1.1294 Monday evening.

The dollar has firmed to $1.3299 against Pound Sterling, gaining from $1.3314.

Against the Yen, the dollar is weaker by about 0.3%, fetching 113.16 yen a unit, as against 113.53 yen on Monday.

The dollar is trading at $0.7128 against the Aussie, firming from $0.7143.

The Swiss franc is at 0.9185 against the dollar, gaining from 0.0229.

The Loonie is weaker against the dollar, easing to C$1.2779 from C$1.2740, weighed down by falling crude oil prices.