Dollar rises broadly after Fed Dudeley's hawkish comments: Jun 20, 2017

Market Review - 19/06/2017 23:02

Dollar rises broadly after Fed Dudeley's hawkish comments

Despite trading sideways in subdued Asian session on Monday following weakness in previous Friday's session on downbeat U.S. data, the greenback regained traction in New York morning after New York Fed President Dudley expressed confidence rising wages would help revive domestic inflation which has shown signs of softening recently and climbed broadly against its major peers. 

Remarks by New York Fed President William Dudley on Monday that tightening in the labor market should help drive up inflation helped offset concerns by some investors that stubbornly low inflation would not allow policy-makers to raise rates further the rest of this year. 

"Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up, and with that inflation will gradually get back to 2 percent," Dudley told a local business group in Plattsburg, New York. 

Versus the Japanese yen, the pair met renewed buying at 110.76 in New Zealand early Monday and rose to 111.14 at Tojyp open, price climbed to 111.21 on gain in the Nikkie as well as rebound in U.S. Treasury yields. Hawkish remarks by New York Fed Dudley helped price rally in New York morning and dlr later hit session highs of 111.60 near the close. 

The single currency maintained a steady to firm undertone in Asian trading on Monday following Fri's strong bounce fm 1.1139 to 1.1201. Price briefly climbed to 1.1212 in NZ following news of an easy win by France's Macron in the Parliamentary election, however, as the result was widely expected, euro inched lower to 1.1190. Euro then found renewed buying at 1.1183 in Europe and hit intra-day high of 1.1213 but only to tumble to session lows of 1.1144 following Fed Dudley's hawkish comments. 

Cable initially slipped to 1.2749 in New Zealand and showed muted reaction to another terrorist attack in North London. Despite moving narrowly in Asia, active buying of sterling sent the pound to intra-day high of 1.2815 in European morning as Britain began its Brexit talks with the EU in Brussels, however, cable later fell in tandem with euro to session lows of 1.2723 in New York morning and traded narrowly for rest of the session. 

Reuters reported the British and EU Brexit negotiators agreed how to organize talks on Britain's divorce at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline. 

"We've laid solid foundations for future discussions and an ambitious but achievable timetable," said David Davis, Britain's Brexit minister, adding he was "encouraged" by the first talks. But the European Union's Michel Barnier made clear little was agreed but an initial calendar and a structure for negotiations. 

The talks began almost a year to the day after Britain shocked Europe by voting to cut loose from the 28-nation EU, its biggest market.