Dollar climbs on Yellen speech

- Agence France-Presse, Hong Kong
Yellen breathed life back into the greenback with a speech in which she said the US economy was meeting the central bank’s inflation and employment goals

Jan 20, 2017-The dollar rallied against high-yielding currencies and cemented gains versus its major peers Thursday as dealers took a speech by Federal Reserve boss Janet Yellen as a hint that US rates will rise further this year.

A weaker yen helped Japanese stocks lead a broad advance across Asian markets as optimism was buoyed by Yellen’s remarks on the economy but traders moved cautiously ahead of Donald Trump’s inauguration on Friday.

In the two months after Trump’s November election win the dollar soared against all other currencies on expectations his big-spending, tax-cutting plans will fan growth, ramp up inflation and force the Fed to lift borrowing costs.

But growing uncertainty in the past two weeks, made worse by a lack of policy detail from the president-elect, has sent investors scurrying back out of the US unit until they see signs of firm plans.

However, Yellen breathed life back into the greenback Wednesday with a speech in which she said the US economy was meeting the central bank’s inflation and employment goals, and was confident it would push on.

“Yellen’s comments reinforced the message that we have been getting from other Fed speakers that the economy is already strong even before the addition of any stimulus from Trumponomics,” said Greg McKenna, chief market strategist at FX and CFD provider AxiTrader.

The dollar was virtually flat against the yen, euro and pound a day after surging around one percent against each. However, it jumped almost one percent against the South Korean won, 0.4 percent against the Australian dollar and 1.3 percent on Canada’s dollar. The Malaysian ringgit was down 0.1 percent, as was Indonesia’s rupiah.

Published: 20-01-2017 09:54

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