US dollar rises on Fed rate hike speculation
THE dollar rose yesterday in Asian trade on renewed hopes for a possible US rate hike this year following hawkish comments from the vice chair of the Federal Reserve.
The greenback moved higher against major currencies after Stanley Fischer said that the US central bank was close to meeting its targets, outlining a bright outlook for the world’s largest economy.
He argued that core inflation was within “hailing distance” of the bank’s 2 percent target while employment had increased “impressively” since its low point in early 2010.
The comments cheered investors, who are now shifting their focus to Fed boss Janet Yellen’s speech this week in Jackson Hole, Wyoming, where global central bankers will congregate for an annual symposium.
“Janet Yellen’s speech on August 26 will have the biggest impact on short-term market moves, especially if she follows in Stanley Fischer’s relatively hawkish tone,” Angus Nicholson, a market analyst at IG Ltd, told Bloomberg News.
“Talking up the US dollar will be good for US financial stocks that would benefit from a rate rise and some of that positivity could spread over into financials globally,” he said.
In Tokyo trade, the dollar bought 100.78 yen, rising from 100.20 yen in New York.
Adding to yen weakness was an interview in the Sankei newspaper in which Bank of Japan governor Haruhiko Kuroda said there is “sufficient chance” it will expand its monetary easing after a meeting next month as the economy stutters.
The two sets of comments highlighted the divergence of monetary policy in Japan and the United States and provided much-needed support to the dollar, which last week fell below 100 yen. –
Money traders work below a display showing the exchange rate between the US dollar and the Japanese yen in Tokyo yesterday.