Currency trends Wednesday: US dollar rises amid comments from Fed’s Clarida

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

The U.S. dollar gained ground on Wednesday as a U.S. Federal Reserve banker made comments the market viewed as hawkish, while sterling fell amid continued Brexit worries.

Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said that comments from Federal Reserve Vice Chairman Richard Clarida, in which he backed gradual interest rate hikes toward a neutral rate, boosted the U.S. dollar.

“Although he also admitted that they don’t really know where the neutral level is and expressed concern about lower inflation expectations, investors were singularly focused on the talk of more rate hikes,” she said in a note on Tuesday.

In addition, she said U.S. economic data reports also bolstered the dollar.

“Aside from the increase in house prices, the decline in the Conference Board’s consumer sentiment index was modest with the index pulling back only slightly from 18-year highs,” she said.

Currencies

The U.S. dollar index was at 97.37 at 7:05 A.M. SGT climbing from as low as 96.98 early in Tuesday’s session, but off levels as high as 97.49 touched on Tuesday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.061 percent at 7:38 A.M. SGT, after touching levels as low as 3.045 percent and as high as 3.066 percent in Tuesday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1298 at 7:58 A.M. SGT after trading in a 1.1276 to 1.1344 range on Tuesday, according to DZHI data.

Sterling declines

The British pound/dollar was at 1.2742 at 7:59 A.M. SGT after trading in a 1.2724 to 1.2820 range on Tuesday, according to DZHI data.

“Pound sterling is depreciating and gilts are rallying as Brexit developments dent earlier positioning due to opposition to the agreement from Northern Ireland’s Democratic Unionist Party,” Scotiabank said in a note on Tuesday. “The DUP doesn’t like the vagueness surrounding future treatment of the border.”

The dollar/yen was at 113.777 at 7:59 A.M. SGT after trading in a 112.85 to 113.651 range on Tuesday, according to DZHI data.

The dollar/yuan ended Tuesday at 6.9497 after trading in a 6.9391 to 6.9534 range during the session, according to DZHI data.

The dollar/Singapore dollar was at 1.3775 at 7:59 A.M. SGT after trading in a 1.3736 to 1.3797 range on Tuesday, according to DZHI data.

The dollar/Malaysian ringgit was at 4.1910 at 8:02 A.M. SGT after trading in a 4.1860 to 4.1935 range on Tuesday, according to DZHI data.

The dollar/Indonesian rupiah ended Tuesday at 14,510 after trading in a 14,470 to 14,649 range during the session, according to DZHI data.

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