US Dollar Rising After Yellen Hints At Interest Rate Hike
New York (May 27) The dollar is gaining ground against all of its major rivals Friday afternoon, after Federal Reserve Chair Janet Yellen signaled in her speech that a summertime interest rate hike is forthcoming.
It will be appropriate for the Federal Reserve to raise interest this summer if the economy continues to improve, Yellen said Friday afternoon.
"I think for the Fed to gradually and cautiously increase our overnight interest over time and probably in the coming months, such a move would be appropriate," she said at Harvard University .
She expects inflation to move back up to 2% objective as crude oil prices have steadied near USD50 after plunging to USD26 earlier in the year.
While the Commerce Department released a report on Friday showing stronger than previously estimated US economic growth in the first quarter, the pace of growth still reflects a significant slowdown.
The report said the pace of growth in gross domestic product was upwardly revised to 0.8% from the initial estimate of 0.5%.
Nonetheless, the revised GDP growth in the first quarter compares to the 1.4% jump seen in the fourth quarter and the 0.9% increase expected by economists.
Consumer sentiment in the US improved by less than initially estimated in the month of May, according to a report released by the University of Michigan on Friday, although the consumer sentiment index remained at an eleven-month high.
The University of Michigan said the final reading on its consumer sentiment index for May came in at 94.7, reflecting a downward revision from the preliminary estimate of 95.8.
The downwardly revised index came in below economist estimates for a reading of 95.5 but was still well above the final April reading of 89.0.
The dollar has climbed to over a 2-month high of USD1.1110 against the Euro this afternoon, from a low of around USD1.12 this morning.
France's consumer confidence unexpectedly strengthened in May to its highest level in more than fifteen years, as households were less pessimistic regarding their future financial situation and saving intentions for the next 12 months, figures from INSEE showed Friday.
The consumer confidence index rose to 98 from 94 in March and April. Economists had expected the measure to remain steady.
The buck has risen to around USD1.4610 against the pound sterling this afternoon, from an early low of USD1.4688 .
Consumer confidence in the UK showed a bit of improvement in May but remained pessimistic, the latest survey from GfK revealed on Friday with an index score of -1. That beat forecasts for -4 and was an improvement over April's -3, although it still was negative.
The greenback has broken out to around Y110.350 against the Japanese Yen this afternoon, from a low of Y109.451 this morning.
Consumer prices in Japan fell 0.3% on year in April, the Ministry of Internal Affairs and Communications said on Friday. That beat forecasts for -0.4%, although it weakened from -0.1% in March.
Core CPI, which excludes volatile food prices, also dipped 0.3%. That was unchanged from the previous reading and it beat forecasts for -0.4%.
SOURCE: AllianceNews
