Yuan falls as USD recovers

The pound and euro both weakened in overnight trading amid the dollar’s strength. They recovered slightly on Thursday morning — the pound rose by 22 cents or 0.17 per cent to US$1.2283, while euro inching higher 0.08 per cent to US$1.0638.

Yellen’s speech was accompanied by the latest inflation data released by the US Labour Department, which shows the Consumer Price Index for December rose 2.1 per cent year on year, the biggest rise since June 2014.

Investors reacted actively to Yellen’s comments, viewing them as hawkish, after Donald Trump’s remarks had dragged down the US dollar earlier in the week, analysts at Aetos Capital said in a report, adding that the next threshold will be 101.7.

Trump said in an interview with the Wall Street Journal that the US dollar was “too strong” to compete with its counterpart in China.

“The broader dollar picture dominated trade overnight. US Treasury yields rallied overnight, underpinned by Hawkish Fed speak,” said Stephen Innes, a senior trader at Oanda.

The question now is whether Yellen supports the idea that there will be three interest rate rises this year alone, Innes said, adding that dealers will now be looking for more clarity during the Fed’s next meeting in March.

South China Morning Post

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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