The US dollar was strong across the board this week with the help of comments for the head of the Federal Reserve. Still, the outlook for the currency is not clear as market participants continue to speculate whether US policy makers are bold enough to start monetary firming in 2015.
At the start of the week, the Forex market was still digesting last week’s policy announcement from the Fed, which suggested that the central bank may delay an interest rate hike. But this week’s comments from Janet Yellen challenged such outlook as the Fed Chairwoman suggested a high probability of monetary tightening by the end of this year.
Yet it looks like speculators remained unconvinced as fund futures are pricing in less that 50 percent probability of a rate increase. Indeed, the dollar weakened a bit by the end of the Friday’s trading session. While the currency retained gains by the end of trading, the future of the greenback is clouded and uncertain.
EUR/USD slipped from 1.1281 to 1.1205, reaching the low of 1.1104 during the week. GBP/USD sank 2.2 percent from 1.5522 to 1.5199 even though Britain’s central bank also plans to raise borrowing costs. USD/JPY ticked up from 120.09 to 120.47. USD/CAD rallied from 1.3229 to 1.3323, and its weekly high of 1.3416 was the strongest rate since June 2004.
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