The US dollar had a muted start to the week, with little data of significance from the country. Activity picked up as we moved in to Tuesday, thanks to both data releases and worldwide events. Inflation data was as predicted, and building permits and manufacturing sales figures surpassed their expected levels, while the uncertainty in the Ukraine continued to add strength to safe havens such as the dollar.
Anticipation ahead of the Federal Open Market Committee (FOMC) meeting prompted further advances on Wednesday, with investors optimistic over the possibility of continued reduction in quantitative easing. These hopes were realised, but the most significant point was the prediction from US Federal Reserve Chair Janet Yellen that interest rates would be higher than forecast at the end of 2015 by 0.25% at 1%, triggering an immediate appreciation against both sterling and the euro.
Yesterday saw this trend continue against the euro, as the dollar hit the highest point in two weeks.. New data yesterday came in the form of the unemployment claims and the manufacturing index from the Philadelphia Federal Reserve, both of which came in ahead of expectations to aid the dollar’s cause. Today sees a quiet end to the week, with just words from members of the FOMC later on due for consideration.
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