News Column

US Dollar Extends Rally On Fed Chair Janet Yellen's Testimony

July 15, 2014



CANBERA (Alliance News) - The US dollar extended rally against its major counterparts in early Asian deals on Wednesday, after the Fed Chairman Janet Yellen's statement that the central bank would raise interest rates sooner than expected, if the US labor market shows sustained improvement.

"If the labor 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," Yellen said in her semi-annual testimony to the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday.

Current Fed projections hold that rates will not begin to rise from zero until mid-2015, but a recent series of upbeat economic data suggests the economy is getting back to normal after a brutal winter.

Yellen pledged to keep accommodative monetary policy for "considerable period", while cautioning that the Fed should be careful to ensure that the economy is on a solid trajectory before consider raising interest rates.

Yellen is to testify on monetary policy before the House Financial Services Committee, later in the day.

The US dollar climbed to 101.76 against the yen, its strongest since July 9. Further rally may see the greenback finding resistance around the 102.5 zone. The pair was worth 101.67 at yesterday's close.

The greenback added 0.08% to hit 0.8962 against the franc, a new 3-week high. At Tuesday's close, the pair was trading at 0.8955. If the greenback continues its uptrend, 0.906 is seen as its next possible resistance level.

The greenback climbed to a session's high of 1.3561 against the euro and further acceleration above this area could help it to set a 4-week high. The next possible resistance for the greenback lies around the 1.35 mark. The pair finished yesterday's trading at 1.3566.

The greenback edged up to 1.7132 against the pound in Asian deals. The greenback may find resistance around the 1.70 region.

The greenback advanced to a 3-week high of 0.8696 against the NZ dollar and near a 2-week high of 0.9335 against the aussie, off early lows of 0.8769 and 0.9373, respectively. The greenback is likely to find resistance around 0.925 against the aussie and 0.86 against the kiwi.

Looking ahead, UK claimant count rate for June and ILO unemployment rate for the three months through May, Swiss ZEW economic sentiment index for July and Eurozone trade data for May are due in the European session.

The US PPI and industrial production for June and NAHB housing market index for July, along with Canada manufacturing shipments for May are scheduled for release in the New York session.

The Bank of Canada is to announce its decision on interest rates. The interest rates are seen on hold at 1:00%.

At 2:00 pm ET, Federal Reserve's Beige book report is due.



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Source: Alliance News


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