The US dollar had a mixed start to the week, with variable economic data prompting shifts in both directions. The first significant event of the week came as the Producers’ Price Index inflation figure dropped unexpectedly, weakening the US dollar. Alongside this, economic forecasts weighed heavy on the currency as they suggested any interest rate rises would be gradual.
Mid-week saw more disappointing inflation levels from consumers, weakening the US dollar further. The main event for the week came on Wednesday evening, as the Federal Reserve took centre stage. The central bank made clear that any decisions regarding potential interest rate rises would be data led and would not happen for a “considerable period” of time. At the same time, the central bank raised the federal funds estimates for the end of 2015; as a result, when the central bank does decide to raise interests, it could be expected to be a fairly constant stream of 0.25% increases towards 3% by the end of 2016.
Following the Federal Reserve meeting the US dollar pushed to a 6-year high against the Japanese yen; however, it ended the day down against both sterling and the euro thanks to poorer data. Whilst data released showed the unemployment claims for the country were better than expected, building figures and manufacturing were both down on expectations. Today is expected to be a quiet day for the US dollar with little significant data due to be release; as a result, the focus will be on other economies, particularly in the UK following the Scottish decision to reject independence.