Gold Silver Reports — The dollar’s best month in more than a year faces one last barrier: Janet Yellen speaks on Friday and any hint that interest-rate hikes will be delayed could spur a reversal for the greenback.
A gauge of the currency against 10 major peers gained 3.1 percent this month after a string of the Federal Reserve Chair’s colleagues signaled their willingness to tighten policy as soon as next month. The odds indicated by futures of an interest-rate increase at the Federal Open Market Committee’s June 14-15 meeting rose as high as 34 percent this week, almost tripling this month.
‘We think there’s only a 20 percent chance she is going to comment on the economy or the outlook for monetary policy,” said Ned Rumpeltin, European head of foreign-exchange strategy at Toronto Dominion Bank in London. “But that will keep the market on its toes anyway, considering the drumbeat of FOMC members in recent days pointed to the risk of an earlier rate hike. The market will be looking for confirmation that Yellen is in sync with these views.”
Dollar Spot Index was little changed Friday as of 6:57 a.m. New York time, after touching the highest level since March earlier this week. The greenback is set for the biggest advance since January 2015, having gained versus 15 of 16 major currencies.
Evidence is mounting the economy is solid enough to merit Fed action, with a measure of data surprises surging to the highest since the start of last year. U.S. economic data have exceeded analysts’ forecasts, resulting in the highest reading in the Bloomberg Economic Surprise Index since January 2015.
The dollar was little changed at 109.62 yen, having advanced as much as 0.2 percent after the communique from the Group-of-Seven summit meeting in Ise-Shima, Japan, said excessive, disorderly foreign-exchange moves have a bad impact on the economy. The greenback strengthened 0.1 percent to $1.1178 per euro, headed for a fourth straight weekly gain.
Jeffrey Gundlach, chief executive officer of DoubleLine Capital LP, said he expects dovish remarks from Yellen Friday. The Fed will refrain from raising interest rates in June unless traders in the futures market assign odds of at least 50 percent to the move, he said Thursday in Beverly Hills, California.
“There’s been speculation of a big-bang easing in June or July, and that could possibly drive the yen weaker,” Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd., said in a Bloomberg Television interview. “A lot also depends on how the feedback from the Fed’s action affects risk sentiment. That’s going to result in a lot of choppiness in dollar-yen.” — Neal Bhai Reports