US Session – Dollar drops on anticipation of dovish Yellen
November 13, 2013 8:54 pm
The euro gained in late New York trading, rising by 0.33% against the US dollar to trade at 1.3435.
The euro’s gains came despite an interview by ECB Executive Board Member Peter Praet, in which he stated that the bank had room to cut rates further and that the bank’s balance sheet could also be used for providing monetary stimulus – basically arguing in favor of rate cuts and asset purchases.
In the United States, the market was expecting the testimony of nominee for the post of Fed President Janet Yellen the following day before the Senate banking committee.
There were some mixed signals from the Fed lately with one Fed President suggesting it was possible for tapering to start as soon as December while another Fed President argued in favor of maintaining stimulative policies.
The market was expecting Yellen to be dovish, which in theory could explain the drop in the value of the dollar.
The pound added to the significant gains it made in the European session, rising 0.32% against the US dollar to trade at 1.6022 – getting back above the 1.60 level.
The pound benefited from a surprise drop in September unemployment to 7.6% (from 7.7% expected) as well as the upbeat tone in the Bank of England’s inflation report.
The report suggested there was a 20% chance that unemployment would drop under 7% (the threshold for monetary tightening) as soon as 2014 – much earlier than the market expects.
Important events ahead included the release of Japanese GDP data during the Asian session, Eurozone GDP during the European session and Yellen’s testimony during the US session.
The euro gained in late New York trading, rising by 0.33% against the US dollar to trade at 1.3435.
The euro’s gains came despite an interview by ECB Executive Board Member Peter Praet, in which he stated that the bank had room to cut rates further and that the bank’s balance sheet could also be used for providing monetary stimulus – basically arguing in favor of rate cuts and asset purchases.
In the United States, the market was expecting the testimony of nominee for the post of Fed President Janet Yellen the following day before the Senate banking committee.
There were some mixed signals from the Fed lately with one Fed President suggesting it was possible for tapering to start as soon as December while another Fed President argued in favor of maintaining stimulative policies.
The market was expecting Yellen to be dovish, which in theory could explain the drop in the value of the dollar.
The pound added to the significant gains it made in the European session, rising 0.32% against the US dollar to trade at 1.6022 – getting back above the 1.60 level.
The pound benefited from a surprise drop in September unemployment to 7.6% (from 7.7% expected) as well as the upbeat tone in the Bank of England’s inflation report.
The report suggested there was a 20% chance that unemployment would drop under 7% (the threshold for monetary tightening) as soon as 2014 – much earlier than the market expects.
Important events ahead included the release of Japanese GDP data during the Asian session, Eurozone GDP during the European session and Yellen’s testimony during the US session.
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