The dollar rose against most major peers, while gold and bonds slipped after Federal Reserve Chair Janet Yellen said the U.S. central bank is on track to raise interest rates this year.
The Bloomberg Dollar Spot Index climbed for the fifth time in six days, with the Australian dollar falling below 70 U.S. cents. Asian equity markets fluctuated, with the Bloomberg Asia Pacific – World Index heading for its longest streak of monthly declines since 2008. U.S. index futures edged higher. Gold fell from a September high as Treasuries and Australian bonds slipped.
Yellen’s message was consistent with other Fed policy makers who have spoken since the central bank shocked markets by citing concerns about weaker-than-hoped-for inflation and the impact of the slowdown in China in its decision last week to defer the first increase since 2006. The Fed chief did acknowledge that any economic “surprises” could alter their plans, with concern over China persisting and faltering growth spurring Taiwan and Norway to cut borrowing costs this week.
“Yellen delivered a speech which confirmed the beginning of ‘normalization’ in 2015, if the economic picture evolves as the Fed expects,” said Sam Tuck, senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. She “was more optimistic — or hawkish — than the tone presented to markets at the post FOMC meeting press conference. The trend for dollar strength should continue overall.”