* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (New throughout)
By Kate Duguid
NEW YORK, Feb 24 (Reuters) - The dollar struggled on Wednesday morning as dovish testimony from Fed Chair Jerome Powell bolstered concerns about rising inflation, hitting multi-year lows against the pound and commodity-linked currencies including the Canadian, Australian and New Zealand dollars.
The Federal Reserve's Powell reiterated on Wednesday that U.S. interest rates will remain low and the Fed will keep buying bonds to support the U.S. economy. The Fed's commitment to low rates has some investors worried that inflation could spike on passage of further fiscal stimulus. remarks to the House Committee on Financial Services mirrored his testimony before the Senate on Tuesday.
The chances for higher growth - aided by easy financial conditions and the promise of fiscal stimulus - has sent money towards currencies expected to benefit from a pick-up in global trade, like those linked to commodities, and to countries like Britain that are recovering from the coronavirus pandemic.
Because commodities rise with inflation, commodity-linked currencies including the Canadian CAD= , Australian AUD= and New Zealand NZD= dollars have also benefited from the rise in inflation fears.
"The market's focus is well ahead of where Powell is talking," said Alan Ruskin, chief international strategist at Deutsche Bank (DE:DBKGn).
While Powell is focused on the current state of the U.S. economy and employment, currency markets are focused more on inflation and reflation, said Ruskin.
"It is critical to make judgements on whether reflation turns into excess reflation which then turns into inflation."
The dollar's weakness in recent days has been more remarkable as it comes against the backdrop of a broader rise in U.S. yields. Benchmark 10-year borrowing costs US10YT=RR are holding near their highest in nearly a year. US/
Against the Canadian dollar, the greenback on Wednesday hit its lowest since 2018 and was last 0.25% lower on the day at 1.256 CAD per dollar. The Australian dollar rose to a three-year high of $0.794 before paring some gains to trade 0.08% stronger at $0.792. The Kiwi rose to its highest since 2018, last up 0.69% on the day to 0.739.
The British pound GBP=D3 climbed past $1.42 overnight for the first time since April 2018.
The dollar index =USD against a basket of six major currencies was at 90.378, up 0.29% on the day, but still trading within a narrow range.
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