The dollar stood tall against the yen and euro early on Wednesday after Atlanta Federal Reserve President Dennis Lockhart expressed his support for an interest rate hike in September. The dollar was 124.29 yen JPY= after pulling away from an overnight low of 123.80. The euro was steady at $1.0892 EUR= after sliding to a two-week low of $1.0879.
Lockhart, a voter this year on the Federal Open Market Committee, told the Wall Street Journal that it would take “significant deterioration” in the U.S. economy for him to not support a rate hike in September. “Lockhart was not scheduled to speak until Monday (10 Aug), so the hawkishness of the comments, and the timing of the interview is surprising,” wrote Richard Cochinos, head of Americas G10 FX strategy at Citi in New York.
After three days of sharp declines, U.S. Treasury yields jumped overnight on Lockhart’s comments and supported the dollar. The dollar index .DXY hovered near a two-week peak of 98.002. The Australian dollar was another currency on a bullish footing. The Aussie received a big boost Tuesday after the Reserve Bank of Australia toned down its call for a weaker currency.
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