CURRENCIES: Dollar Jumps To 1-month High Vs. Euro Ahead Of Yellen Speech
September 26 2017 - 06:49AM
Dow Jones News
By Sara Sjolin, MarketWatch
Euro slides as German election woes linger
The dollar climbed against most other currencies on Tuesday,
rising to a one-month high against the euro as traders continued to
digest the German election and looked ahead to a speech on monetary
policy from Federal Reserve Chairwoman Janet Yellen.
The greenback drove up to its highest level against the euro
since Aug. 25, with the shared currency buying $1.1824, down from
$1.1850 late Monday in New York. Meanwhile, the jumped to a 10-week
high against the euro, buying EUR1.1423, up from EUR1.1367 on
Monday.
The eurozone currency also fell on Monday after German
Chancellor Angela Merkel secured a fourth term in the election over
the weekend
(http://www.marketwatch.com/story/germanys-anti-immigrant-party-set-to-be-first-in-more-than-50-years-to-enter-parliament-2017-09-24),
but nonetheless registered a sharp drop in her party's overall
support. Merkel now has to form a coalition government, a process
that analysts fear could be difficult and take months.
Read:How Merkel's choice of partner could set the tone for the
euro
(http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)
"The markets continue to worry that in her weakened political
state Frau Merkel will not be able to maintain the steady policy
consensus that has resulted in the best Eurozone recovery in
years," said Boris Schlossberg, managing director of FX strategy at
BK Asset Management, said in a note.
Euro investors were also fretting about an independence
referendum in the Spanish region of Catalonia on Sunday, although
the central government in Madrid has declared the vote illegal.
Read:German election result revives eurozone jitters as
investors turn attention to Spain
(http://www.marketwatch.com/story/german-election-result-revives-eurozone-jitters-as-investors-turn-attention-to-spain-2017-09-25)
Across the pond, attention will turn to Fed boss Yellen, who
will speak in Cleveland at 12:45 p.m. Eastern Time about inflation,
uncertainty and monetary policy at the National Association for
Business Economics's annual meeting.
"As many analysts have already pointed out, the German election
has taken the sails out of the euro rally and today Ms. Yellen
could turn that sentiment even more negative by affirming her
support for further U.S. monetary tightening," Schlossberg
said.
"Yellen is likely to maintain a hawkish tone in her remarks
reaffirming the latest FOMC statement last week. Any dollar
supportive rhetoric could push USDJPY back above the Yen112.00
figure while sending euro below the key $1.1800 support," he
added.
See:Yellen says low inflation a 'mystery,' but not mysterious
enough to keep rates low
(http://www.marketwatch.com/story/feds-yellen-says-low-inflation-a-mystery-but-not-mysterious-enough-to-keep-rates-low-2017-09-20)
The dollar bought Yen111.68 on Tuesday ahead of the speech,
compared with Yen111.73 late Monday in New York. The Japanese
currency had risen during Monday's session after North Korea
claimed the U.S. had declared war on the country and said Pyongyang
now has the right to shoot down U.S. strategic bombers
(http://www.marketwatch.com/story/north-korean-official-says-us-has-declared-war-2017-09-25-13103598).
The ICE Dollar Index traded 0.2% higher at 92.818, around its
highest level since late August.
The pound was flat around $1.3468.
(END) Dow Jones Newswires
September 26, 2017 06:34 ET (10:34 GMT)
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