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The start of a new era of dollar strength?
The US dollar has largely held onto to its gains this Thursday after the Fed Chair, Janet Yellen, suggested at a news conference that US interest rates could rise in six months' time. Her comments caught the markets by surprise. Along with the dollar, US treasury yields rose sharply while there were big falls in global stock markets.
Saxo Bank's Head of FX Strategy, John Hardy, says this is an important start for the US dollar after looking so weak across the board for some time. Whether it's a longer term trend will depend a lot on incoming economic data over the next few weeks. He says we're notably likely to see dollar strength against what he calls the G10 'smalls'. While the dollar rose strongly against the Japanese yen on Wednesday, John points out that any US interest rate rise could pressure global liquidity and the outlook for the pair is more uncertain.
John has more detailed analysis here:
https://beta.tradingfloor.com/posts/hawkish-fed-catches-market-surprise-usd-goes-rampage-408819447
02:12 minutes
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