USD on Track for Worst Quarter After Fed Rate Hike Hopes Doused

The dollar fell broadly on Wednesday and with just one more day left in March headed for its worst quarter in five years against a basket of currencies, as investors wound back their expectations for U.S. interest rate rises in 2016.

The Australian and New Zealand dollars, currencies that are closely correlated with commodity prices, both soared to nine-month highs as oil prices — which are U.S. dollar-denominated — rose and became cheaper for holders of other currencies.

The greenback had hit a two-week high against a basket of major currencies at the start of the week, boosted by a series of hawkish comments from Fed officials that gave investors the impression that U.S. interest rates could increase twice this year, with the first hike coming as soon as April.

But Fed Chair Janet Yellen poured cold water on those expectations on Tuesday, stressing the need to be cautious in raising rates and highlighting external risks including low oil prices and slower growth abroad.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza