The U.S. dollar continued to be stronger against the other major currencies in late Asian session on Thursday, as sentiment improved in the wake of Federal Reserve Chair Janet Yellen’s testimony overnight, signaling a rate hike this year.
In the semiannual testimony before Congress on Wednesday, Yellen said the Fed would raise interest rates by the end of the year.
“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal-funds rate target, thereby beginning to normalize the stance of monetary policy,” Yellen said in a prepared text.
Fed watchers say a September rate hike is on the table, but geopolitical uncertainties such as the Greek debt crisis might compel the central bank to wait until December.
“Looking forward, prospects are favorable for further improvement in the U.S. labor market and the economy more broadly,” Yellen said.
In Greece, the Hellenic Parliament has approved the tough austerity measures required by the European Union, paving the way for Athens to receive the much-needed bailout loans of EUR 86 billion.
The ECB’s Governing Council meets in Frankfurt later on Thursday, while Germany’s Parliament will reconvene to vote Friday on whether to start bailout negotiations.
Wednesday, the U.S. dollar rose 0.59 percent against the euro, 0.15 percent against the Swiss franc and 0.41 percent against the yen.
In late Asian session today, the U.S. dollar rose to more than a 1-1/2-month high of 1.0909 against the euro and nearly a 3-month high of 0.9554 against the Swiss franc, from early lows of 1.0961 and 0.9514, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.07 against the euro and 0.99 against the franc.
Moving away from early lows of 1.5632 against the pound and 123.68 against the yen, the greenback edged up to 1.5607 and 123.91, respectively. The greenback may test resistance near 1.50 against the pound and 126.00 against the yen.
Against the Australia and the New Zealand dollars, the greenback climbed to 6-year highs of 0.7349 and 0.6497 from early lows of 0.7388 and 0.6601, respectively. On the upside, 0.70 against the aussie and 0.62 against the kiwi are seen as the next resistance level for the greenback.
Looking ahead, Swiss retail sales for May and Eurozone trade balance for May and final CPI for June are due to be released in the European session.
The European Central Bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to retain interest rates unchanged at 0.05 percent.
Following the announcement, European Central Bank President Mario Draghi will hold the customary post-meeting press conference.
In the New York session, U.S. weekly jobless claims for the week ended July 11 and U.S. NAHB housing market index for July are slated for release.
At 10:00 am ET, Yellen will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee in Washington DC.
At 2:00 pm ET, Bank of England Governor Mark Carney is expected to speak at the Resolution Foundation, in Lincoln, England.
The material has been provided by InstaForex Company – www.instaforex.com