Dollar hits one-week high as Fed officials eye rate hikes

Wed Mar 23, 2016 8:31pm EDT
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By Dion Rabouin

NEW YORK (Reuters) - The dollar rose to a one-week high against a basket of currencies on Wednesday as Federal Reserve officials talked up the likelihood of more interest rates later this year, perhaps as early as April.

The dollar index .DXY, which tracks the U.S. currency against six major rivals, rose about 0.4 percent to 96.044, the highest level since March 16.

Several members of the U.S. central bank in recent days have suggested the Fed should raise rates, which would make U.S. investments more attractive against other currencies and be expected to support the dollar.

The greenback also rose broadly against oil-linked currencies as crude futures fell more than 3 percent. The Canadian CAD= and Australian dollars AUD=, as well as the Mexican peso MXN=, each fell by more than 1 percent.

"The broad dollar move is really driven by the overall positive tone of the (Federal Open Market Committee) speakers that we've heard over the past couple days," said Ian Gordon, FX strategist at Bank Of America Merrill Lynch in New York.

St. Louis Fed President James Bullard said in an interview on Wednesday that policymakers should consider raising rates at their next meeting in April.

Those sentiments echoed Philadelphia Fed President Patrick Harker who said on Tuesday that "there is a strong case that we need to continue to raise rates."

Chicago Fed President Charles Evans added to the chorus, saying on Tuesday he expects two more rate increases this year, unless economic data comes in a lot stronger than expected or inflation picks up faster than anticipated.   Continued...

A U.S. one-hundred dollar bill (C) and Japanese 10,000 yen notes are spread in Tokyo, in this February 28, 2013 picture illustration. REUTERS/Shohei Miyano