U.S. Dollar Strengthens On Growing Hopes For Dec. Rate Hike
September 26 2017 - 11:55PM
RTTF2
The U.S. dollar climbed against its major opponents in Asian
session on Wednesday on growing hopes for a December rate hike,
following remarks from the Fed Chair Janet Yellen against moving
too slowly on interest rates.
"My colleagues and I may have misjudged the strength of the
labor market, the degree to which longer-run inflation expectations
are consistent with our inflation objective, or even the
fundamental forces driving inflation," Yellen said a meeting of the
National Association for Business Economics in Cleveland on
Tuesday.
Yellen indicated that "downward pressures on inflation could
prove to be unexpectedly persistent."
"Without further modest increases in the federal funds rate over
time, there is a risk that the labor market could eventually become
overheated, potentially creating inflationary problems down the
road that might be difficult to overcome without triggering a
recession," Yellen said.
Investors awaited the announcement of a tax reform by the U.S.
President Donald Trump and Republican leaders later in the day. The
administration is proposing to slash the corporate tax rate to 20
percent from current 35 percent and individual tax rate to 35
percent with the possibility of imposing higher tax rate to the
wealthy.
The currency has been trading in a positive territory on
Tuesday.
The greenback advanced to a 5-week high of 1.1742 against the
euro and a 2-day high of 0.9741 against the franc, from yesterday's
closing values of 1.1792 and 0.9687, respectively. The next
possible resistance for the greenback is seen around 1.16 against
the euro and 0.98 against the franc.
The greenback spiked up to near a 2-week high of 1.3364 against
the pound and a 6-week high of 0.7846 against the aussie, from
Tuesday's closing values of 1.3457 and 0.7883, respectively. On the
upside, 1.33 and 0.77 are likely seen as the next resistance levels
for the greenback against the pound and the aussie,
respectively.
The greenback firmed to 112.78 against the Japanese yen, its
strongest since July 2017. The greenback is poised to challenge
resistance around the 113.5 zone.
The greenback edged up to 1.2389 against the loonie and 0.7177
against the kiwi, off its early lows of 1.2339 and
0.7216,respectively. Further uptrend may take the greenback to
resistance levels of around 1.25 against the loonie and 0.70
against the kiwi.
Looking ahead, Eurozone M3 money supply for August is due.
In the New York session, U.S. durable goods orders and pending
home sales for August are set for release.
Bank of Canada Governor Stephen S. Poloz speaks at St. John's
Board of Trade in Newfoundland, Canada at 12:00 pm ET.
At 1:30 pm ET, Federal Reserve Bank of St. Louis President James
Bullard gives presentation on the U.S. economy and monetary policy
before an event hosted by Truman State University, Missouri.
Federal Reserve Board Governor Lael Brainard speaks on "Labor
Market Disparities and the Mission of the Federal Reserve" before
conference, "Banking and the Economy: A Forum for Minority Bankers"
hosted by the Federal Reserve Bank of Kansas City at 2:00 pm
ET.
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