US dollar is higher again today, strengthening as economic data points to improvement, and on speculation that the Fed will take steps to tighten monetary policy sooner than expected.
As the Fed concludes its two-day policy meeting today, many Forex traders and others are looking for clues that monetary policy will be tightened. Expectations for an improved labor market are high, and the latest consumer confidence readings and consumer spending indications are that things are getting better in the United States. GDP is also on the rise, and that is helping matters for the US dollar as well.
With these improvements, many expect that Fed Chair Janet Yellen will hint at higher interest rates sooner rather than later, and that is lending strength to the greenback against its major counterparts, particularly the euro. Policy divergence is the main driver of US dollar strength today, and that is unlikely to change for some time — at least until other economies start to improve as well.
At 14:07 GMT the US dollar index is higher, gaining to 81.4580 from the open at 81.2010. EUR/USD is down to 1.3378 from the open at 1.3409. GBP/USD is also lower, moving down to 1.6904 from the open at 1.6944. USD/JPY is higher, gaining to 102.6220 from the open at 102.1180.
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