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Powell’s readiness to hike rates boosts the dollar index.

Investment.com On Monday, the U.S. dollar hit its highest level against a group of other currencies in 20 years. This happened as investors thought about Federal Reserve chair Jerome Powell’s promise to keep interest rates high to fight inflation.

Related: Stock Market Crash Caused by Powell’s Jackson Hole Speech

The dollar index was trading at 109.26 at 02:44 ET (06:44 GMT), retreating from a record 20-year high of 109.48 reached earlier in the trading day.

The dollar’s Asian equivalents declined. The offshore yuan reached a fresh two-year low of $6.9321, and the Japanese yen fell to 138.88 per dollar.

In the meantime, the Australian dollar plummeted to $0.6858 and the New Zealand dollar dropped to $0.6109.

At a carefully watched central bank conference in Jackson Hole, Wyoming, Powell stated that the Fed has no intention of a dovish adjustment in its rate policy and would continue to increase borrowing rates.

He also warned that rising interest rates could slow down economic growth in the United States. He said that people and businesses may have to go through “some pain” before rising consumer prices are brought under control.

Powell’s remarks prompted wagers that the Federal Reserve would raise interest rates by 75 basis points in September and that rates would finish the year much over 3%.

Related: European stocks rise as Powell’s speech dominates market sentiment By Peter Nurse:

The emphasis now switches to Friday’s release of U.S. employment statistics. A robust report on the labour market might offer the Fed more space to sustain the present rate of monetary policy tightening.

In other regions, the euro’s brief excursion over dollar parity lost speed, with the single currency trading at $0.9944 during European morning trade. Towards the end of last week, it was reported that the European Central Bank may also discuss boosting its key rates by up to 75 basis points at their September meeting.

Concerns linger, though, over the bloc’s capacity to withstand an impending energy crisis precipitated by this week’s unexpected repair to a crucial gas supply route from Russia. The Moscow-backed energy giant Gazprom (MCX:GAZP) is anticipated to halt natural gas exports to Europe via the key Nord Stream 1 pipeline between August 31 and September 2.

Related: The PMI data and Powell’s testimony hurt European stocks.

In the wake of Powell’s comments, market sentiment toward riskier assets declined, resulting in Bitcoin trading at $19,821, for a loss of 1.16%.

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