With the US dollar soaring to its highest since 2003, unprecedented moves in the Euro, Yen, and Yuan are now daily headine-makers. Overnight saw USDJPY near 111.00 (before rolling over a little this morning), pushing the pair to its best 2 week gain since 1988… and its second best 2-week gain since currencies floated.
As Reuters reports, further underpinning the dollar was a speech by Federal Reserve Chair Janet Yellen, who on Thursday provided a signal that U.S. interest rates would rise next month, in line with most market participants' expectations.
“What we're looking at is a broad shift of investment back to the U.S.,” said Richard Cochinos, Citi's head of G10 currency strategy in London.
“There are expectations for tax cuts next year – which were part of the Trump campaign's promises – and then there's also the idea of what type of fiscal boost are you going to have. That's what’s driving asset prices – it's people's expectations for the fiscal impulse next year,” he said.
Cochinos added that political and economic worries in Europe, Britain and Japan were keeping investors away from those currencies, providing the dollar with another boost.
“Dead cat bounce”?