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European Session – Dollar retains strength a day after Yellen’s comments
March 20, 2014 2:36 pmVideo
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The dollar maintained its strength on Thursday after Fed Chair Janet Yellen’s comments on Wednesday. The prospect of tighter monetary policy in the US sooner- than- thought, resulted in a sell-off in equity markets, hurting risk appetite.
During a post-FOMC statement press conference, Yellen made specific reference to when she thought the Fed would begin raising interest rates. Yellen implied in around six months after the end of the Fed’s bond buying program. This suggested that a first rate hike would come by the summer of 2015, far earlier than the market expected.
Wednesday’s events gave the dollar much relief especially since it had come under pressure recently against the euro and other major counterparts.
Today’s US data on initial jobless claims were positive and allowed the dollar to keep its strength. Claims for jobless benefits for the week ending March 15 rose less-than-expected to 320,000 compared to the 330,000 that was forecast. Today’s number was however higher than the previous week’s 315,000. Other US data also lent support to the dollar. The Philly Fed manufacturing index was quite upbeat and showed a strong rebound in March. Markets ignored the slightly lower-than-expected US February existing home sales data.
The dollar was up 0.16% against the yen in today’s European session at 102.38.
The euro was down 0.51% in the European session today to trade at 1.3767, the lowest in two weeks. Against the yen, the euro was down 0.40% to 140.89 and also fell against the pound, down 0.2% to 0.8345.
Sterling did not fall as much against the dollar as the euro did due to Wednesday’s strong UK jobs data giving some support to the British currency. The pound was down 0.31% against the dollar in today’s European session to trade at 1.6494.
The dollar’s gains put gold under pressure, and sent the precious metal down to three-week low of $1,325.96 an ounce.
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