USD flows: Muted response to Powell

A muted initial reaction to Powell’s testimony. US yields are a fraction firmer as Powell says the Fed is in no hurry to adjust rates, but the USD is little changed. Powell also indicates that long term inflation expectations are well anchored, and that the Fed is attentive to risks on both sides of its mandate, so it’s hard for the market to react too much, especially since it’s not long since the statement at the last FOMC, and there is little conclusive news that has emerged since. FX markets are showing a mild risk positive bias with the JPY correcting lower on the crosses and the USD marginally soft against the riskier currencies, but the moves are modest and it will require tomorrow’s US CPI to be away from expectations to break the current ranges.