Dollar Rebounds from One-Month Low on Interest Rate Speculation

0
128

Dollar Rebounds from One-Month Low on Interest Rate SpeculationThe dollar rebounded from its lowest level in one month against its main counterparts on speculation over when the Federal Reserve may hike interest rates.

The U.S. currency rose 0.2 percent to $1.3577 per euro, nudging on to a 0.3 percent drop this week, the most since the five days through April 11. The dollar advanced 0.2 percent to 102.10 yen while the euro declined 0.1 percent to 138.63 yen.

The U.S. currency took a hit from Fed’s comments that it won’t raise interest rates even after phasing out its monthly bond-purchase program.

“The Fed meeting’s impact on the bond market is already disappearing,” Hans Redeker, a London-based head of global currency strategy at Morgan Stanley told Bloomberg. “Higher U.S. bond yields have positive impact on volatilities, supporting the dollar”.

**relatedarticle**

Today’s trading also saw yields 10-year Treasuries increase by 0.03 percentage point or three basis points to 2.65 percent.

Federal Reserve policymakers have retained cash rate at 0 percent to 0.25 percent since 2008 during the economic recession.  Research shows that most analysts are 93 percent optimistic that the central bank’s chairwoman Janet Yellen will retain the record-low interest rates.

Separately, the Canadian dollar surged 0.4 percent to trade at C$1.0776 per dollar after inflation rose. This is the highest mark since January 8. Canada’s consumer price index rose to 2.3 percent in May from a year ago, and passed the central bank’s goal for the first time in over a year. Retail sales in April also exceeded estimates. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com