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

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and 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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