U.S. dollar rises as Powell doesn't rule out consecutive interest-rate hikes

NEW YORK, June 28 (Xinhua) -- The U.S. dollar strengthened on Wednesday, after Federal Reserve Chairman Jerome Powell refused to rule out the possibility of consecutive interest rate hikes as the central bank continues its battle against inflation.

The dollar index, which measures the greenback against six major peers, was up 0.41 percent to 102.9122 in late trading.

At a central banking panel hosted by the European Central Bank (ECB) on Wednesday, Powell said that the current policy setting may not be restrictive enough.

"We believe there's more restriction coming. What's really driving it ... is a very strong labor market," Powell said.

In addition, Powell also said he does not see inflation coming down to the Fed's 2 percent target until 2025.

According to the CME FedWatch Tool, markets see a more than 80 percent chance of a rate hike next month, which is also seen as the last rate hike.

Georgette Boele, senior economist sustainability research at ABN AMRO, noted that her bank's interest rate forecast is roughly in line with market expectations, which could support U.S. nominal and real yields and the U.S. dollar.

"Previously, we did not hold the view of aggressive rate cuts to come in the near term, but we had expected the easing cycle to start at the end of this year," Boele said. "We no longer have a rate cut for the Fed this year and fewer total rate cuts in 2023-2024. This is a positive for the U.S. dollar."

ECB President Christine Lagarde said she feels "we still have ground to cover" and thinks "we will very likely hike again in July."

Bank of Japan Governor Kazuo Ueda said his institution could tighten its ultra-loose policy if inflation doesn't ease up, while Bank of England Governor Andrew Bailey stressed the importance of bringing down prices and said he wouldn't consider raising the 2 percent inflation target.

In late New York trading, the euro was down to 1.0922 U.S. dollars from 1.0960 dollars in the previous session, and the British pound was down to 1.2648 U.S. dollars from 1.2751 dollars in the previous session.

The U.S. dollar bought 144.3170 Japanese yen, higher than 144.0130 Japanese yen of the previous session. The U.S. dollar was up to 0.8965 Swiss franc from 0.8931 Swiss franc, and it increased to 1.3254 Canadian dollars from 1.3182 Canadian dollars. The U.S. dollar was up to 10.7726 Swedish Krona from 10.7178 Swedish Krona.