The US dollar gained more than 1 percent against the basket of major currencies today, reaching the highest level in almost 8 years against the Japanese yen. Today’s economic data from the United States added to the upward momentum of the greenback.
The dollar just continued the bullish trend that has started last Friday. While the rally has slowed on Monday due to quiet trading during the Memorial Day holiday, the advance resumed in full swing on Tuesday.
Tuesday’s reports fueled the upward momentum, being positive for the most part. Among positive indicators were the Richmond Fed manufacturing index, rising consumer confidence and new home sales.
The favorable data increases chances for an early interest rate hike from the Federal Reserve. While it is highly unlikely that the Fed will make its move in June, most market participants still expect monetary tightening this year, just at a later date.
EUR/USD dropped from 1.0976 to 1.0881 as of 22:15 GMT today, trading near the lowest level since April 28. GBP/USD declined from 1.5468 to 1.5385, touching the lowest since May 8. USD/JPY surged from 121.55 to 123.03.
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