The dollar plunged against the other major currencies, after getting a boost from remarks by Fed Reserve Chair Janet Yellen, who specified that the U.S. central bank is ready for a rapid pace of rate hikes this year.
On Tuesday the dollar became unstable while sterling increased more than 3% since 1998, marking its best performance as the currency markets inverted most of the previous day’s changes.
On the following day, the greenback rallied as forex traders put back their confidence on the USD after five straight days of selling which placed its value against a basket of major currencies at the bottom in over a month. The U.S. dollar prolonged its strong point in late afternoon trade after Fed Reserve Chairwoman Janet Yellen stated the central bank anticipates a few rate hikes a year until the end of 2019.
Speaking in San Francisco overnight, Yellen stated that waiting too long to start increasing rates could “risk a nasty surprise down the road.”
The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, eased 0.14% to 101.17, moving away from overnight peaks of 101.4.
The rate increased in December mirrored confidence the U.S. economy will continue to improve, Yellen said.
On Wednesday, positive data on U.S. consumer prices and industrial output also fed into anticipations for additional rate hikes this year.
On Additional News
The euro pressed higher against the greenback, with EUR/USD advancing 0.21% to 1.0651 prior to the European Central Bank’s policy meeting later in the day at which no changes were anticipated.
Compared to the dollar, the euro ended Wednesday’s session down 0.77 percent.
The dollar changed a little against the yen, with USD/JPY at 114.70, after jumping 1.8% on Wednesday.
Sterling inched higher, with GBP/USD increases 0.47% to 1.2314 as investors continued to measure the U.K. government’s strategies for a clean break from the EU.
So many other things revolve around on what is going to happen to the dollar this year. It will rest on what happens to return on invested capital. Whether the U.S. dollar increases or declines will be the main motivator of performance for almost any asset class in 2017.
Exo Capital Markets gives only the best to its clients as we work to create an international community of quality traders. You choose Exo, you choose success.