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Currency Market Analysis

Jun 21, 2017 | Currency Market Analysis

Global Themes

USD sees further gains as Fed signals one more hike

The US dollar was stronger again overnight as commentary from Federal Reserve officials pointed to one more rate hike by the end of the year.

This Fed commentary comes after the US central bank raised US interest rates last week – the third hike in less than six months.

In general, higher interest rates usually lead to a stronger currency.

GBP pounded

In other markets, the major move was in the British pound.

The GBP was sent lower after Bank of England governor Mark Carney said the impact of Brexit was likely to weigh on the UK economy.

The AUD was weaker after the Reserve Bank of Australia continued to signal worries about the increasing debt load of Australian households.

Yesterday’s RBA minutes indicated the central bank remains worried about financial stability and is not considering rate hikes any time soon.

A recent pick-up in local growth numbers had caused some analysts to predict the RBA might soon raise rates. After yesterday’s statement, any hike seems some time away.

RBNZ in focus

Today’s focus will be on the release of minutes from the Bank of Japan’s most recent meeting.

The JPY has weakened since the last meeting.

Otherwise, central banks remain in focus, with Bank of England chief economic Andy Haldane speaking tonight and the Reserve Bank of New Zealand meeting tomorrow morning.

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