US Dollar Trades Higher On Fed Rate Hike Expectations
Canberra-Australia (Sept 9) The US dollar moved up against the other major currencies on Tuesday, amid speculation that the Federal Reserve may hike sooner-than-forecast in line with a recovery in the world's largest economy.
A report released yesterday by San Francisco Fed suggested that low market volatility indicate that investors are underestimating the Federal Reserve's trajectory for interest rate hike.
"On balance, our evidence indicates that the public seems to expect more accommodative monetary policy than the Summary of Economic Projections suggest," they concluded, adding that "the public also appears to be less uncertain about the future course of monetary policy than FOMC participants."
Traders seem to brush aside Friday's disappointing jobs data and look forward to data due this week, including US retail sales and weekly jobless claims for further clarity on the state of US economic recovery.
The greenback spiked up to 106.37 against the yen, a level not seen since October 2008 . If the greenback continues its bullish trend, 108.00 is seen as its next possible resistance level.
Members of the Bank of Japan's monetary policy board felt that the country's economy is on track to continue its moderate recovery, minutes from the bank's August 7-8 meeting revealed.
The members added that inflation expectations appear to be rising as the country continues to battle the deflationary pressures that have plagued it for the last 15 years.
The greenback rose to 1.2858 against the euro, most since July 2013 . Further uptrend may take the greenback to a resistance around the 1.28 zone.
The greenback strengthened to a 1-year high of 0.9379 against the Swiss franc, and held steady thereafter. On the upside, the greenback may challenge resistance near the 0.945 mark.
The greenback advanced to near a 10-month high of 1.6063 against the pound, before retracing some its gains in a short while. The pair was trading at 1.6096, compared to 1.6103 hit late New York Monday.
The greenback climbed to more than a 4-month high of 1.1001 against the loonie and near a 3-week high of 0.9250 against the aussie, and moved sideways thereafter. Next key resistance for the greenback may be eyed around 1.11 against the loonie and 0.92 against the aussie.
The greenback that ended Monday's trading at 0.8271 against the NZ dollar drifted up to near a 9-month high of 0.8247. The greenback is likely to challenge resistance around the 0.816 zone.
Looking ahead, the Bank of England governor Mark Carney's speech in Liverpool is due shortly.
Canada housing starts data for August is to be released at 8:15 am ET .