Forex - Dollar stable at most 9 months, pound sterling
Jan 2 2018, 00:00
The dollar is close to a nine-month high against other major currencies this Tuesday, in anticipation of a short-term rate hike, while the pound falls ahead of declarations by the Governor of the Bank of England Mark Carney. The US dollar index, which replicates the trend of the greenback against a basket of six other major currencies, is stable at 98.69. The index rose by 3.44% this month, following the statements of several members of the Federal Reserve that in recent weeks have fueled expectations for a rate hike before the end of the year. Expectations of higher rates support gold, making it more attractive to holders of other currencies. Yesterday, Chicago Fed President Charles Evans said the central bank could decide to raise rates three times from now until the end of 2017, if labor market conditions and inflation should continue to improve. Also yesterday, data showed a recovery in the manufacturing sector in October. The next Fed summit is in November, but an increase in rates ahead of the presidential elections is a very unlikely possibility. According to the Investing.com Fed's Investor Policy Check, there is a 72.5% chance of a rate hike at the December summit. EUR / USD is stable at 1.0870, just above the seven month low of 1.0858 touched on Friday. The single currency remains on the defensive after the ECB indicated last week that an increase in the stimulus program in December is possible. The euro was not affected by the data that showed that the confidence of German companies rose to a maximum of two years in October, despite the uncertainty after the Brexit and the US presidential elections in sight. The dollar rose to a maximum of a week and a half against the yen, with USD / JPY rising 0.32% to 104.5, not far from the two and a half months touched this month. The pound is down, with GBP / USD at 1.2215 amid fears that the Governor of the Bank of England, Mark Carney, deems further monetary stimulus necessary. Bank of England Governor Mark Carney will report to the commission on economic affairs in London on the economic consequences of Brexit. Carney said that inflation will increase due to the weakening of the pound and that the BoE has to assess the rise in inflation against the stimulus of the economy at low interest rates.