The US dollar harboured mixed fortunes at the start of a turbulent week. Early gains were made before they were retracted on the back of oil prices, while some minor data showed both positive and negative outcomes. The continued decline in oil saw the dollar drop throughout Tuesday, as investors looked to safer havens such as the Japanese yen, before improved performance mid-week. Here the dollar rose from the recent four-week lows thanks to speculation ahead of the Federal Reserve meeting.
Lower-than-expected inflation failed to dent the currency, with hopes of more evidence that interest rates will rise in the US sooner rather than later. The wording from the Federal Reserve did change, with the ‘considerable time’ phrase being removed in favour of one of patience with regards to when interest rates will go up. Federal Reserve Chair Janet Yellen also stated that it would be unlikely for any rate hikes to happen in the next few months, which started investors speculating that this could still refer to the first quarter of 2015, given the loose wording. As a result, the dollar gained in the immediate aftermath.
Throughout yesterday, however, ground was lost against sterling but made against the euro, given mixed data. As well as continued reaction to the previous day’s events, the unemployment claims and the manufacturing index from the US had some impact dollar performance, with the former better than expected and the latter worse. Today closes out the week in quiet fashion, with no data of note due, so the earlier events may continue to be on investors’ minds.