Dollar rises after Fed's Evans comments on quantitative easing

By Sinéad Carew and Gertrude Chavez-Dreyfuss

NEW YORK, Sept 22 (Reuters) - The dollar rose to an eight-week high on Tuesday, after a top Federal Reserve official struck a hawkish tone and said further quantitative easing may not provide additional lift to the U.S. economy.

The euro touched an eight-week low against the dollar, while the Swiss franc fell to a seven-week trough.

Speaking at a virtual meeting of the London-based Official Monetary and Financial Institutions Forum, Chicago Fed President Charles Evans said the U.S. economy risked a longer, slower recovery, if not an outright recession without another fiscal support package. Evans also said he does not see open-ended quantitative easing as providing an important part of the answer.

Evans is not a voter at the Federal Open Market Committee this year , but he will be in 2021.

"Evan's comments were extremely hawkish. He mentioned pausing QE and rates rising before the inflation target is reached. That kind of surprised the market," said Edward Moya, senior market analyst at OANDA in New York.

"The sooner we get to the other side of this virus, you're going to see rate hike expectations jump up and that should further drive this dollar rebound."

The dollar climbed in earlier trading after parts of Europe imposed new restrictions aimed at curbing surging coronavirus cases.

Meanwhile Fed Chair Jerome Powell told a congressional panel on Tuesday that while America's economy has shown "marked improvement" since the coronavirus pandemic drove it into recession, the path ahead remains uncertain and the U.S. central bank will do more if needed.

In midday trading, the dollar =USD was last up 0.47% at 94.027 versus a basket of currencies. It hit a high of 94.086, its strongest level since late July.

The euro was down 0.6% against the dollar at $1.1703 EUR=EBS, after falling below a key $1.17 level, its lowest since late July as well.

The dollar also gained against the yen, rising for a second day in a row. It was last up 0.38% at 105.04 yen JPY=EBS.

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Currency bid prices at 12:13PM (1613 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1703

$1.1769

-0.56%

+4.40%

+1.1773

+1.1693

Dollar/Yen

JPY=

105.0400

104.6400

+0.38%

-3.51%

+105.0700

+104.4100

Euro/Yen

EURJPY=

122.95

123.17

-0.18%

+0.82%

+123.2700

+122.6600

Dollar/Swiss

CHF=

0.9201

0.9143

+0.63%

-4.93%

+0.9203

+0.9138

Sterling/Dollar

GBP=

1.2731

1.2814

-0.65%

-3.98%

+1.2866

+1.2712

Dollar/Canadian

CAD=

1.3311

1.3306

+0.04%

+2.51%

+1.3345

+1.3283

Australian/Dollar

AUD=

0.7173

0.7223

-0.69%

+2.18%

+0.7235

+0.7165

Euro/Swiss

EURCHF=

1.0770

1.0762

+0.07%

-0.76%

+1.0772

+1.0746

Euro/Sterling

EURGBP=

0.9193

0.9183

+0.11%

+8.75%

+0.9220

+0.9145

NZ Dollar/Dollar

NZD=

0.6635

0.6666

-0.47%

-1.50%

+0.6687

+0.6633

Dollar/Norway

NOK=

9.3513

9.2791

+0.78%

+6.53%

+9.3677

+9.2725

Euro/Norway

EURNOK=

10.9460

10.9300

+0.15%

+11.26%

+10.9880

+10.9135

Dollar/Sweden

SEK=

8.9039

8.8414

+0.09%

-4.74%

+8.9132

+8.8403

Euro/Sweden

EURSEK=

10.4232

10.4134

+0.09%

-0.44%

+10.4300

+10.3845

(Additional reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Jonathan Oatis and Chris Reese)

((sinead.carew@thomsonreuters.com; +1 (646) 223 6186; Reuters Messaging: sinead.carew.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.