Dollar up on U.S. rate speculation after Yellen comments

NEW YORK Wed Jul 16, 2014 3:58pm EDT

An employee of a money changer counts U.S. dollar notes for a customer at a bank in Cairo December 31, 2013.  REUTERS/Stringer

An employee of a money changer counts U.S. dollar notes for a customer at a bank in Cairo December 31, 2013.

Credit: Reuters/Stringer

NEW YORK (Reuters) - The dollar rose broadly on Wednesday amid market speculation Federal Reserve Chair Janet Yellen is tilting toward tightening monetary policies that have kept U.S. interest rates at record lows.

"We are seeing the dollar strong against the euro, against sterling, against the yen a little bit," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group Limited in New York.

Disappointing economic reports in Europe and comments on Tuesday and Wednesday by Yellen before Congress suggesting U.S. rate hikes may come sooner than expected were driving dollar purchases, currency strategists said.

"It seems to me that there are a few more hawkish hints than we have seen lately," Wizman said. "I don't think we will get more hawkish hints from the Fed until September. But the trend until then, and through that period, is strongly U.S. dollar."

The dollar index, which measures the dollar's performance against a basket of six other major currencies, was up 0.2 percent to 80.565 after touching its highest level in a month.

"She cracked the door open to potentially earlier U.S. rate rises, and that has really caught the market's attention," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. Treasury yields, seen as central to the dollar's appeal in currency markets, were initially higher on Wednesday but later slipped, with the benchmark 10-year U.S. Treasury note up 3/32 in price to yield 2.537 percent after touching a high of 2.57 percent.

Sterling fell against the dollar to $1.7135, off a nearly six-year high of $1.7192 struck on Tuesday, but it was up against the euro to a near two-year peak.

The euro was down 0.35 percent at $1.3523, falling to its lowest in one month, while the greenback was slightly higher against the yen at 101.71 yen after touching a one-week high of 101.79.

(Additional reporting by Anirban Nag and Lisa Twaronite in London; Editing by Nick Zieminski and James Dalgleish)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.