U.S. dollar, stocks climb as Yellen signals rate hike coming

Thu Nov 17, 2016 4:26pm EST
 
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By Caroline Valetkevitch

NEW YORK (Reuters) - The U.S. dollar climbed to a 13-1/2-year high and global stock indexes rose on Thursday after comments by U.S. Federal Reserve Chair Janet Yellen bolstered the case for raising interest rates next month.

Yellen, who testified on the economic outlook before the congressional Joint Economic Committee, indicated little had changed following the victory of Donald Trump in the Nov. 8 U.S. presidential election.

She said she intended to serve out her term, which ends in 2018, and indicated the Fed remained on track to raise rates at its meeting next month.

Expectations have been high among investors that the Fed will raise rates in December.

Also helping the dollar was upbeat U.S. economic data, which stoked expectations of an acceleration in U.S. economic expansion in the fourth quarter.

The dollar index .DXY, tracking the greenback relative to a basket of six foreign currencies, extended gains in U.S. afternoon trading following Yellen's comments, and was last up 0.5 percent.

Strength in the dollar weighed on gold, which fell to a 5-1/2-month low of $1,210.73 XAU=.

U.S. stocks, which rallied last week after Republican Donald Trump's surprise White House win on the potential for economic stimulus, also rose, led by gains in financials .SPSY, which benefit from higher rates.   Continued...

 
U.S. Federal Reserve Board chair Janet Yellen shakes hands with Senator Dan Coats (R-IN) (L) before testifying at a Congressional Joint Economic hearing on Capitol Hill in Washington, DC, U.S. November 17, 2016. REUTERS/Gary Cameron