Publications
Partners
New York, Nov 4, 2015 (AFP) - The dollar strengthened on Wednesday after Federal Reserve Chair Janet Yellen's comments signalled that an interest rate increase remained a possibility next month.
Yellen, testifying before a congressional panel, said the economy was "performing well" and, if conditions warrant, a rate hike in December "would be a live possibility."
Yellen's remarks were "a sign that US policymakers are eager for liftoff to begin," said Kathy Lien of BK Asset Management. The central bank's last policy meeting of the year is December 15 to16.
After the Fed, in a policy meeting in late October, passed on a hike in its near-zero federal funds rate, market expectations had largely pushed back the timing of liftoff to next year.
The dollar rose as high as $1.0844 per euro, its strongest level since late July. Around 22:00 GMT, the pair traded at $1.0865, compared to $1.0959 at the same time on Tuesday.
The greenback rose against the Japanese currency, buying ¥121.55 compared with 121.03 on Tuesday.
Data on the vast US services sector meanwhile supported the view of a brighter outlook for the economy. Nonmanufacturing activity expanded sharply in October, according to the purchasing manager’s index of the Institute for Supply Management.
"While today's report was strong, what's more important is that the positive trend in business activity seen through the first three quarters of 2015 looks set to continue through year end," FT Advisors said in a client note.
Lien predicted the dollar would remain strong even after Friday's much-anticipated October jobs report.
"The dollar is rising not only because the Fed could raise interest rates next month but also because, relatively speaking, the US is currently the strongest major economy," she said.
"We expect the dollar to remain firm going into and out of... the nonfarm payrolls report."
