The dollar rose to the highest level in 11 months versus the euro after Federal Reserve Chair Janet Yellen acknowledged that the labor market has improved over the past five years, though some slack still remains.
The greenback surged 0.3 percent to trade at $1.3245 per euro as of 4:33 pm New York time, after earlier rising to $1.3221, the most since September 9. The dollar advanced 0.1 percent to 103.90 yen after appreciating to 104.18, the strongest level since Jan. 23. The euro plunged 0.2 percent to 137.65 yen.
“The market reaction has been positive for the dollar,” Brian Daingerfield, a Stamford, Connecticut-based currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit, told Bloomberg News. “We’re very used to Chair Yellen’s view of the labor market being generally considered on the dovish side. Today’s commentary was neither hawkish nor dovish.”
Yellen’s remarks at the annual gathering of world’s central bankers in Jackson Hole, Wyoming backed speculation the Fed will hike interest rates in 2015. The euro reduced losses after the European Central Bank President Mario Draghi expressed confidence that the stimulus measures will revive demand in the euro zone. Draghi told fellow central bankers and economists in Jackson Hole that economic recovery should be aided mostly by fiscal policies; dampening speculation the ECB will rely on monetary policies to boost growth.
Meanwhile, the Brazilian real fell after Latin America’s biggest economy reported a bigger-than expected current account deficit in July. The real dropped 0.5 percent to trade at 2.2788 per U.S. dollar after the central bank reported that current account deficit expanded to $6 billion from $3.3 billion. Foreign direct investment jumped to $5.9 billion in July compared to $3.9 billion the prior month, against expectations of a deficit of $5.8 billion and an investment of $5.4 billion.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 firstname.lastname@example.org