US dollar is mostly higher today, thanks in large part to economic and to some profit taking. However, dollar gains might be limited, as the expectation of another rate hike from the Federal Reserve fades.
One of the reasons the US dollar has been performing well recently is due to the fact that there have been expectations of further Fed rate hikes. However, analysts, after listening to Fed Chair Janet Yellen’s testimony before Congress this week, don’t think that we will see rate hikes for the rest of the year. Economic recovery is too tepid for that.
Even though the economic recovery might not be moving at the pace expected, the US economy is still showing signs of life. Retail sales increased 0.2 per cent in January, and there are other signs that things continue to improve, albeit slowly.
Also helping the greenback today is a degree of profit taking as Forex traders lock in their recent gains, especially their euro-related gains.
At 14:40 GMT the US dollar index is up to 96.082 from the open at 95.648. EUR/USD is lower, dropping to 1.1249 from the open at 1.1326. GBP/USD is lower as well, falling to 1.4458 from the open at 1.4475. USD/JPY is higher, rising to 112.8660 from the open at 112.3470.
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