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Dollar Slips Against Major Rivals

The U.S. dollar traded weak against its major counterparts on Wednesday amid a drop in bond yields as treasuries rose on fears that the Fed's commitment to tackle price pressures by hiking rates sharply is likely to cause a recession.

The yield on U.S. 10-year treasury note dropped to about 3.14%.

Traders also noted the Fed Chief Jerome Powell's testimony before the Senate Banking Committee. Powell said that the Fed is strongly committed to bring inflation back down to its longer-run goal of 2 percent.

In prepared remarks, Powell indicated the Fed plans to continue moving expeditiously to combat inflation but argued the U.S. economy is strong enough to handle tighter monetary policy.

However, Powell later acknowledged that achieving a "soft landing" will be "very challenging" due in part to factors outside of the Fed's control and noted a recession is "certainly a possibility."

Powell said the pace of future interest rate hikes will be dependent on incoming data and the evolving outlook for the economy and suggested the Fed will need to see "compelling evidence" that inflation is slowing before it begins to scale back its monetary policy tightening plans.

The Fed Chief said the central bank will strive to "avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time."

The dollar index, which drifted down to 103.86 by mid morning, was hovering around 104.20 a little while ago, down 0.22% from the previous close.

Against the Euro, the dollar weakened to $1.0566 from $1.0534.

The dollar is up marginally against Pound Sterling at $1.2265.

Against the Japanese currency, the dollar is weaker, fetching 136.22 yen a unit, compared to 136.62 Tuesday evening.

The dollar is stronger against the Aussie at 0.6928, firming from 0.6970.

The Swiss franc has strengthened to 0.9614 a dollar, gaining from 0.9662. The Loonie has weakened to 1.2947 a dollar as oil prices fell sharply. Data from Statistics Canada showed Canada's annual inflation quickened to 7.7% in May of 2022, the highest since January 1983 and above market expectations of 7.4%. The Consumer Price Index in Canada increased 1.4% in May of 2022 over the previous month.

Core consumer prices in Canada increased a record 6.1% year-on-year in May of 2022, above 5.7% in April and forecasts of 5.9%. On a monthly basis, consumer prices increased 0.8% in April, accelerating from a 0.7% rise in the prior month.

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