Dollar Gains Momentum Awaiting Yellen’s Comments
By Anatol Thomas
The US dollar has been having a hard time with the release of poor economic data. The outlook of the Federal Reserve plays a major role in determining the value of the currency in the forex market. On Tuesday trading, the dollar gained momentum and reached its five-week high as the industry awaits comments from the Fed chair, Janet Yellen.
After the interest rate hike in June, the Federal Reserve expressed its positive opinion on the US economy. This boosted the interest of the investors because the Fed was remaining positive about economic growth despite the reports. The US economic data released in the past week is not satisfactory. However, the market is keen on knowing what Yellen has to say at the London Royal Academy later this Tuesday.
As a result of the positive outlook of the investors, the dollar has reached five-week high against Yen. The positive comments from Fed chair could result in increased interest in US dollar and hedge funds. As a result, Yen would be pushed lower.
USD/JPY pair was trading at 112.075 which is a greater increase from 111.88 yen a day ago. On Monday, the US economic data made the investors cautious. The capital goods declined in May along with the shipments. This means that the manufacturing sector is stalling in the second quarter of this year. The Treasury bond yields reached a seven-month low after the release of this data.
The Fed officials, however, remain optimistic as they say that the economic slowdown is just due to one-off factors and the economy is on the recovery path.
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