The US
dollar ended the week with gains against most major currencies (but not
versus the Great Britain pound). The reason for the good
performance was the outlook for monetary tightening, supported
by comments from Fed Chair Janet Yellen.
For the whole
week, traders were waiting for Yellen’s
speechat the Jackson Hole Meeting, hoping that she might reveal
timing for the next interest rate hike. In reality, she did not
provide a specific date, but hinted that it may happen soon, though
the exact timing depends on economic data:
Indeed, in light of the continued solid performance
of the labor market and our outlook for economic activity
and inflation, I believe the case for an increase
in the federal funds rate has strengthened in recent months.
Of course, our decisions always depend on the degree
to which incoming data continues to confirm the Committee’s
outlook.
Bets on a hike this year rose
after the announcement.
While
the dollar ended the week as the second strongest currency,
the first one was the pound. Strong macroeconomic indicators released
from the United Kingdom eased
concerns about impact
on the Brexit on the UK economy, making the sterling
more appealing to investors.
EUR/USD dipped 1% from 1.1307 to 1.1192 during the week.
GBP/USD ticked up from 1.3073 to 1.3127, touching the weekly high
of 1.3272. USD/CHF jumped 1.8% from 0.9607 to 0.9779.
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