US dollar sags as Powell speaks

The market is increasingly tuned into the pace of balance sheet runoff and Powell offered at hint that he’s in no rush to wind down holdings in his confirmation hearing.

“This year I expect the Fed will raise rates, end asset purchases and perhaps later this year allow the balance sheet to shrink,” he said.

Other Fed officials have been calling for more aggressive balance sheet normalization. Powell’s comments suggest he’s not on board with that thinking.

The US dollar has sagged in the past few minutes. That could be flows around the London fix, which just passed.

Cable in particular has made headway and is challenging the earlier highs.

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