Dollar rallies broadly on upbeat U.S. data and Yellen's hawkish comments: Nov 18, 2016

Market Review - 17/11/2016 22:01

Dollar rallies broadly on upbeat U.S. data and Yellen's hawkish comments

The greenback ended the day higher against majority of its peers on Thursday as the release of upbeat U.S. data together with comments from Fed Chair Yellen increased speculation of a rate hike in December. 

Versus the Japanese yen, although dollar weakened to 108.56 in Asia, price pared its losses and rebounded to 109.46 ahead of European open, then higher to 109.64 in New York morning, price later rallied to a fresh 5-1/2 month peak of 110.18 at the close. 

Despite edging lower to 1.0683 ahead of European open, the single currency pared its losses and rallied to session high at 1.0746 ahead of New York open. However, renewed selling there pressured the pair lower and price tumbled to a fresh 11-month trough at 1.0663 in New York morning, decline later extended to session lows of 1.0619. 

The British pound tracked euro's intra-day movements and dropped to session low at 1.2411 ahead of European open before rallying to an intra-day high at 1.2507 (Reuters) after the release of robust UK retail sales. Later, cable pared its gains and retreated sharply to 1.2423 in New York morning, then 1.2408 near the close. 

In a report, U.K. Office for National Statistics said that retail sales increased 1.9% in October from the prior month, compared to the prior gain of 0.1% which was revised from a previously flat reading. Analysts had expected retail sales to rise 0.4% last month. 

In other news, Fed Chair Janet Yellen said 'FOMC judged at november meeting a rate increase could well become appropriate relatively soon; risk of fed falling behind curve on inflation stays limited at least for near future, warranting only gradual rises in fed funds rate; U.S. economy has made progress this year toward Fed's objectives; job gains in 2016 well above estimates of what needed to absorb new entrants to labor force; expects growth to continue at moderate pace, with global growth firming, further U.S. job market strengthening, and return of inflation to Fed's two pct target over next couple years; stable jobless rate, above-trend job growth mean U.S. economy has had a bit more room to run; appears to be scope for some further improvement in labor market; further employment gains may well help support labor force participation, wage gains; decision to hold rates steady at last FOMC did not reflect lack of confidence in economy, but a judgement job market had more room to grow than Fed expected earlier in year; monetary policy must remain forward looking; delaying rate rises for too long could encourage excessive risk-taking and force a faster pace of increases later.' 

On the data front, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 12 fell by 19K to a seasonally adjusted 235K from the previous week's total of 254K. Analysts expected jobless claims to rise by 3K to 257K last week. 

Data to be released on Friday: 

Germany producer prices, Eurozone current account, Canada CPI, U.S. leading index change and Kansas Fed manufacturing activity.