US Dollar (USD) Exchange Rate Firming After Federal Reserve’s Yellen Inspires Confidence
The US Dollar is currently trading up at 0.5835 against the British Pound, and 0.7393 against the Euro after the Federal reserve has inspired confidence this week in the ‘Greenback.’.
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The ‘Buck’ has seen highs of 0.5844 and lows of 0.5831 this session against the Pound; whilst against the Euro it’s traded higher than it has in the last month, meeting its pinnacle at 0.7393 against its lowest point of 0.7367.
The US Dollar is experiencing an important week as the Federal Reserve chairwoman, Janet Yellen, makes her Semi-Annual Testimonies to both the Senate and House Committee.
The US Dollar however has rallied after Yellen has spoken inspiring optimism regarding the US economy and interest rate hikes.
The chairwoman has stressed that she does not believe the US has recovered yet, however she has motivated optimism regarding interest rate hikes, suggesting that if positive data was consistently reported that rises could be sooner than first thought.
Yellen stated: ‘If the labour market continues to improve more quickly than anticipated by the committee, resulting in faster convergence toward our dual objectives, then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned.’
Furthermore with increasing pressure mounting on the Federal Reserve to advise on the time frame of the increase interest rates, Yellen commented: ‘There’s no formula I can give you. It will depend on the progress of the economy.’
However some economists are unsatisfied with Yellen’s comments, wishing for more specific details from the Federal Reserve.
BK Asset Management representative, Kathy Lien expressed: ‘Yellen provided absolutely no guidance on when rates would rise and despite the rally in the ‘Greenback’, the general tone of the FOMC statement was dovish.’
The US has seen a mixed bag of results by way of data on Wednesday with the Housing Market Index increasing to a favourable 53 from the former 49.
However Industrial Production data only attained 0.2%, despite being forecast for 0.3%, whilst Manufacturing Production slumped at only 0.1% whilst again expected to reach 0.3%.
The US Dollar however could be further influenced by data publishing in the rest of the week as Thursday will release Building Permits, Initial Jobless Claims, Continuing Claims, and Housing Starts data.
Meanwhile Friday will see Consumer Confidence data that could prove highly significant for the ‘Buck’.
With the Fed increasing encouragement in the US Dollar to gain, the ‘Buck’ may rise up against some of its other major currency peers.