The US dollar was falling for the most part of Thursday’s trading session yet trimmed its losses after the head of the US central bank made unexpectedly hawkish remarks. Today, the currency is rising.
Janet Yellen, Chairperson of the Federal Reserve, delivered a speech in University of Massachusetts, Amherst, closer to the end of yesterday’s session. In particular, she said:
Most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2 percent objective.
While last week’s policy announcement from the Fed led to speculations among market participants that US policy makers are not going to raise interest rates this year, Yellen’s remarks made them change their tune.
As for Thursday’s economic data from the United States, it was mixed. Unemployment claims were little changed, durable goods orders dropped while new home sales climbed, rising beyond expectations.
EUR/USD dropped from 1.1229 to 1.1173 as of 1:19 GMT today. GBP/USD fell from 1.5241 to 1.5223. USD/JPY gained from 120.06 to 120.32.
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