US Dollar (USD) Exchange Rate at Multi-Week and Multi-Month Highs
Widespread gains for the US Dollar exchange rate earlier this week were inspired by the Federal Open Market Committee’s decision to taper stimulus by a further $10 billion.
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The currency’s upward momentum was also spurred by an unexpected hint from Federal Reserve President Janet Yellen regarding the timeline for increasing interest rates.
Yellen insinuated that borrowing costs could be increased in six months time, considerably sooner than initially expected.
The safe-haven asset extended its advance yesterday following the release of positive US initial jobless claims and Philadelphia manufacturing output reports.
Overnight the US Dollar consolidated its bullish relationship with rivals like the British Pound, Canadian Dollar and the Euro as Fitch, one of the top three ratings agencies, left the US AAA credit rating intact and raised the nation’s outlook from negative to stable.
In the opinion of currency strategist Ray Attrill; ‘We are in for a little bit of Dollar strength here. I’d imagine that what Yellen said about the six months was music to Mr Fisher’s ears’ – Richard Fisher is the President of Dallas Federal Reserve and is due to speak later today.
While US economic news was lacking on Friday, additional US Dollar gains were enabled as investors turned to safe haven assets in response to the imposing of stricter sanctions on Russia by the European Union and US.
The ‘Greenback’ is currently in line to record its most significant five-day gain against its major rivals for two months.
Next week the US economic reports to be particularly aware of include Monday’s Markit PMI, Tuesday’s consumer confidence and new home sales figures, Wednesday’s durable goods orders data, Thursday’s GDP, personal consumption, pending home sales and initial jobless claims reports and Friday’s University of Michigan Confidence index.
As it stands the US Dollar is trading against the Pound in the region of 0.6060 and against the Euro in the region of 0.7250