USD: US dollar hits highs following Japanese election and Fed Chair expectation

The dollar touched a three-month high against the Japanese yen yesterday and was trading around its highest levels for two-and-a-half-weeks against a basket of six major currencies. Traders have been speculating that the next head of the Federal Reserve could take a more hawkish stance than the current Chair, Janet Yellen.

In comments aired on Monday, Donald Trump said that he would make his choice on the next Fed Chair ‘very shortly’ and was considering at least three people: Fed Governor Jerome Powell, Stanford University economist John Taylor and current Fed Chair Janet Yellen.

In addition to this, increased expectations of federal tax cuts helped support the dollar. Yesterday was very quiet on the economic data from, but later today we’ll see some purchasing managers’ index data from the US.

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