💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

FOREX-Dollar gains on March rate hike hopes ahead of Trump speech

Published 01/03/2017, 11:44 am
Updated 01/03/2017, 11:50 am
© Reuters. FOREX-Dollar gains on March rate hike hopes ahead of Trump speech
EUR/USD
-
USD/JPY
-
DX
-
DXY
-

* U.S. economy grew at a slower pace in Q4, as previously reported

* Fed officials comments spark March rate hike hopes

* All eye on Trump's speech at 0200 GMT

By Yuzuha Oka

TOKYO, March 1 (Reuters) - The dollar ticked higher on Wednesday as a handful of Federal Reserve policymakers boosted expectations for a March U.S. interest rate increase, just hours ahead of long-awaited speech by U.S. President Donald Trump.

The greenback rose 0.3 percent to 113.16 yen JPY= while the euro dropped 0.1 percent against the dollar to $1.0565 EUR= .

The dollar index, which measures the greenback against a basket of six major peers .DXY was last up 0.1 percent at 101.48.

New York Fed President William Dudley, among the most influential U.S. central bankers, said that the case for tightening monetary policy "has become a lot more compelling".

John Williams, President of the San Francisco Fed, said that a rate increase is very much on the table for serious consideration at March meeting given the economy at full employment and accelerating inflation.

Money market futures are now pricing in about a 70 percent chance of a rate hike in March, compared to about a 30 percent or less at the start of week.

Comments from Fed officials suggested they are worried about rising inflation, as Trump has promised to deliver big stimulus even as the economy is steadily expanding.

Markets will scrutinise Trump's address at 0200 GMT for specifics of how the Republican president aims to fulfil his promises to tackle tax reform, boost infrastructure spending and simplify regulations he says are harming business.

However, investors are wary that Trump may disappoint those seeking greater detail on how he will reform the tax code as he focuses on domestic issues.

"There are two key factors investors will look out for in Trump's speech: fiscal stimulus and tax reform," said Koji Fukaya, President at FPG Securities in Tokyo.

"The dollar would strengthen if Trump mentions both in detail. If he touches only the tax reform, the range would stay the same. The markets would be disappointed if he does not elaborate on either of the agendas, and the dollar could weaken below 111 yen," said Fukaya.

The dollar rallied to a 14-year high soon after Trump won the U.S. election last November, buoyed by hopes he would introduce large fiscal stimulus and reflationary plans. However, the greenback sagged in January in the absence of specifics on tax reform.

U.S. economic data released on Tuesday showed a moderate growth path under the Trump administration, as the U.S. economy expanded at a slower pace in the fourth quarter, in line with last month's estimate. U.S. consumer spending, which accounts for more than two-thirds of the country's economic activity, was revised sharply higher to a 3.0 percent rate of growth in the fourth quarter.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.