Currency News: Dollar Falls Against Euro, Yen
Currency News
The US dollar fell against some of its main rivals last week even as the economy posted strong data. The US dollar index, which is measured against six other major currencies, fell 1.4% for the week, but the dollar will more than likely recover those losses and increase this week. Thats because the Federal Reserve policy makers are likely to suggest an interest rate hike this year at its meeting this week.
The indication that interest rates would be raised this year would cause the dollar’s value to increase, as higher rates would increase the return on bank deposits held in dollars. Strong data from last week increased the likelihood of an interest rate hike this year, as producer prices in May saw their largest gain in nearly two years, while government data from the day before showed that retail sales for the month of May surged as well.
The US dollar will be affected by a variety of meetings this week. The Bank of England is meeting this week, and minutes from that meeting could cause large movement of the GBP/USD currency pair. The US Federal Open Market Committee will release its latest rate decision on Wednesday, which will affect the US dollar against other major currencies, while the European Central Bank’s economic bulletin on Thursday will have large effects on the euro, especially if negative comments about quantitative easing arise.
