February 26, 2018 / 1:26 AM / a year ago

FOREX-Dollar steady, focus on Fed chief Powell's testimony

* Focus on Fed chief Powell’s congressional testimony

* Powell due to testify on Feb. 27

* US CFTC data shows drop in dollar-bearish bets

By Masayuki Kitano

SINGAPORE, Feb 26 (Reuters) - The dollar steadied on Monday, with investors looking to Federal Reserve Governor Jerome Powell’s first congressional testimony for hints on the future pace of U.S. monetary tightening.

The dollar index, which measures the greenback against a basket of six major rivals, was unchanged at 89.879. It had gained nearly 0.9 percent last week and pulled away from a three-year low near 88.25 set on Feb. 16.

A view that the dollar’s selloff had been overdone, and minutes from the Fed’s January rate-setting meeting that offered a relatively upbeat tone had helped give the dollar a lift last week.

Speculators’ net short dollar bets fell in the week to Feb. 20, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday, as investors priced in more interest rate increases by the Federal Reserve.

The focus this week is on Fed Chairman Jerome Powell’s congressional testimony on monetary policy and the economy.

Some market participants said Powell could keep the market guessing about the pace of U.S. rate increases.

“There is no incentive for Powell to pre-signal any shift in the Fed narrative,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, wrote in a note.

“There little to suggest this new Fed chair will be any less dependent on economic data than his predecessor, so the jury should remain out about a quicker pace of interest rate normalisation,” Innes added.

Powell will now testify on the central bank’s semi-annual report on monetary policy and the economy on Tuesday, Feb. 27 before the U.S. House of Representatives’ Financial Services Committee.

The committee had previously scheduled his appearance for Wednesday, Feb. 28. The hearing will be held at 10 a.m. (1500 GMT), said the committee, which did not provide a reason for the change.

Against the yen, the dollar eased 0.1 percent to 106.75 yen .

The euro held steady at $1.2298, after falling 1 percent last week as market participants turned cautious toward the euro ahead of the Italian general election on March 4.

A German Social Democrats’ poll of its members on joining another coalition government with Chancellor Angela Merkel’s conservatives is also due that day, two big political risk events for markets.

Sterling edged up 0.1 percent to $1.3981.

There was subdued reaction in early Asian trade to a newspaper interview released on Saturday, which suggested that the Bank of England might need to raise British interest rates somewhat sooner than Deputy Governor Dave Ramsden had expected if wage growth picks up early this year.

Ramsden was one of two policymakers who opposed the BoE’s decision in November to raise interest rates for the first time in a decade, but appears to have shifted his stance somewhat in remarks published by the Sunday Times. (Reporting by Masayuki Kitano; editing by Kim Coghill)

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