020 7898 0500The US dollar slipped against a basket of currencies yesterday, pulling back from a 13-and-a-half year peak as traders digested prepared remarks from Federal Reserve Chair Janet Yellen and awaited additional comment in her testimony before lawmakers.
The market was speculating whether Yellen would raise caution about the dollar’s spike and a surge in U.S. bond yields. Trump’s victory unleashed inflation rise expectations on the back of the expected tax cuts and federal spending he promised during his campaign. Yellen maintained current rhetoric when she did speak to say that there could be an interest rate rise ‘relatively soon’ which leaves very much open the possibility of a December rate rise.
The dollar started the day strong on the back of better-than-expected housing data from the US and the fall in jobless claims to a 43-year low last week. Today sees a number of Yellen’s colleagues in the Federal Open Market Committee (FOMC) speaking, with Bullard, Dudley and George testifying. It will be interesting to see if they offer any more rhetoric around interest rate rise expectations.
