Investors await Powell's testimony and Canada inflation after Hot UK CPI data

The safe-haven dollar gained ground on most peers on Wednesday as investors turned nervous again about global growth prospects, while the yen hit a fresh 24-year low as elevated bond yields in the US and Europe contrasted with low Japanese interest rates.

The dollar index, which measures the greenback against six peers, is a touch firmer at 103.67. The benchmark US 10-year Treasuries yield is pretty steady, at 3.2617%.

GBP extends losses in the wake of higher inflation

The British pound extended losses in early trading on Wednesday after official data showed British inflation hit a new 40-year high last month of 9.1%. Soaring food prices pushed the British consumer price index to a 40-year high, the highest rate out of the Group of Seven countries and underlining the severity of the cost-of-living crunch. Meanwhile, rising inflation adds pressure on policymakers to ease household burdens and complicates the BoE's job.

As global investors seek US assets compared to assets elsewhere, the buyers of GBP/USD are confronted with the fear of recessions on both sides of the Atlantic, which would hurt the sterling more than the US dollar. The pound is on the back foot to retest the 1.2172 support level. A sustained move below this hurdle can lead to further losses toward the 1.20 psychological level of interest.

The dollar gains a new record high against the yen

Investors are looking for further clues about whether another 75-basis-point hike is likely in July when US Federal Reserve chair Jerome Powell begins his testimony to Congress on Wednesday.

A Reuters poll of economists predicts the Fed will raise rates 75 basis points in July, followed by a half-percentage-point hike in September, and won't move back to quarter-percentage-point increases until November at the earliest.

Unlike the Bank of Japan, which pledged to maintain its ultra-low interest rate policy last week, most of the world's central banks are in similar situations.

The yen's depreciation in response to Japan's low-interest rates and the rise in US rates has weighed on its value against the dollar. USD/JPY hit a new 24-year high of 136.71 per dollar in early trading on Wednesday.

Bank of Japan policy minutes released Wednesday show the central bank is concerned about the impact the slumping currency could have on business conditions in Japan. Yet, there is no clear sign of taking any action against it.

Events of today

Investors will closely watch Canada's inflation figures, which will be released later in the session. The core CPI is expected to continue to rise to 5.9% year over year, while the monthly core CPI is expected to cool down from the last reading of 0.7% in April to 0.4% in May. Greater than expected data can put more pressure on the Loonie, especially after oil prices slumped earlier Wednesday.