020 7898 0500As the pound skidded on the BoE squashing any interest rate rise rumours, the dollar took full advantage by hitting a three-week high yesterday. This movement was no doubt boosted by comments from the US Federal Reserve (Fed) that bolstered expectations it would keep raising interest rates.
New York Fed President William Dudley said on Monday that tightening in the US labour market should help drive up inflation, reinforcing the message that a recent patch of weak data is unlikely to derail plans to keep raising interest rates, after two hikes already this year. The markets are still concerned about the recent raft of negative data, and it would need more confidence to strengthen the dollar further.
Separately, Chicago Fed President Charles Evans said that it might be worthwhile for the US central bank to wait until year-end to decide whether to raise interest rates again, but this appeared to have little negative effect on the dollar. Investors are now pricing in around a 50% chance of another rate hike before the end of the year.
In an otherwise quiet day, later sees existing home sales and crude oil inventories.
