US Dollar continues to strengthen after upbeat Fed comments

Frankfurt (Mar 24)  The dollar climbed against most other rival currencies on Thursday as hawkish comments from Federal Reserve members spurred chatter of a rate rise this spring.

The ICE dollar index DXY, +0.26%  rose 0.3% to 96.299, setting it on track for a fifth straight session of gains. It would also be the gauge’s strongest close in more than a week.

Against the yen, the greenback USDJPY, +0.20%  advanced to as high as ¥113 before stabilizing around ¥112.86.This compared with ¥112.38 late Wednesday in New York.

The U.S. currency received a boost from a series of upbeat comments by Federal Reserve officials this week that rekindled speculation that the central bank might soon raise short-term interest rates again. On Wednesday, St. Louis Federal Reserve Bank President James Bullard suggested that a rate increase in April remained a possibility.

However, the dollar was unable to test further upside as many investors remained reluctant to make major moves, instead closing out their currency positions ahead of the coming Easter holiday weekend observed by markets in many parts of the world — though not in Japan.

“The dollar remains firm, despite a lack of support from the (Tokyo) stocks,” said Marito Ueda, director at FX Prime byGMO. “But investors find it difficult to move,” he said.

The Nikkei Stock Average NIK, -0.64%  closed down 0.6%.

“Although the dollar’s downside bias is felt stronger than previously expected, the dollar is unlikely to fall below ¥110, but finds it very hard to go above ¥113,” said Ueda. “That makes investors wonder what is the next trading cues,” he said.

The euro EURUSD, -0.1968%  was at $1.1174, slightly lower than $1.1179 late Wednesday. Against the yen EURJPY, +0.01% the common currency was at ¥125.94 from ¥125.63.

The pound GBPUSD, +0.1629%  continued its march lower, as investors feared the attacks in Brussels this week raises the likelihood the U.K. might vote to leave the European Union, the so-called Brexit. Sterling bought $1.4071, down from $1.4117 late Wednesday in New York.

Source: MarketWatch