Currency News: Focus On Interest Rate Hike With Greek Deal In Place
Currency News
With a Greek deal in place, the dollar has advanced against the euro, yen, and Swiss franc as investors’ focus shifts back to the upcoming interest rate hike from the Federal Reserve. Analysts now firmly believe that the US central bank will raise interest rates in September, as comments from Fed chair Janet Yellen on Friday indicated. The dollar climbed 1.3% against the euro on Monday and the US dollar index moved 0.6% higher.
Greece leaving the European single currency could have caused the Fed to wait longer to raise interest rates because it would have destabilized markets. With this threat no longer a reality, investors will resumer pouring over Yellen’s words, as she is slated to give a semiannual testimony to the US Congress later this week. The potential to raise rates in September means the dollar should continue to gain value against the euro.
The dollar was trading at just above $1.10 against the euro at the close of trading on Monday and hit more than a one-week high of 125.535 yen. With a interest rate hike coming in the US and quantitative easing continuing in Europe, the dollar and the euro could soon reach parity. While the stronger dollar is good news for US consumers, it will weigh on profits for big multinational companies and will play a large role in second quarter earnings coming in the next few weeks.
