Kuwait-Mubasher: Federal Reserve Chair Yellen emphasized her expectations that the Fed would begin raising interest rates before year-end, according to a report by NBK Capital.
She highlighted that postponing a lift-off for too long could force the Fed to hike more abruptly, risking a recession. The market interpreted these as hawkish comments relative to post-FOMC pricing and expectations, hence supporting the U.S. Dollar by the end of the week.
The U.S. dollar index started the week at 95.03 and then rallied on the back of good economic indicators coming out of the U.S., supporting the case that the U.S. economy may be gaining enough strength to withstand a rate hike.
The index rose 0.5% to 96.502 on Friday, turning around from a slide to 95.458 the previous day, and taking its gains for the week to 1.7 %; its best performance since mid-July.
The euro started the week at 1.1281 against the dollar, and then moved slightly higher to 1.1329 where it found lots of resistance. The currency later dropped reaching a low of 1.1103.
The renewed fall in the euro comes amid speculation that the ECB will keep or expand its massive bond-buying program in place for longer than originally anticipated.
The sterling pound opened the week at 1.5533, and then rose slightly reaching a high of 1.5466. Soon after, the sterling started to drop again, reaching a low of 1.5150.
The drop came after a survey revealed that more than a half of UK’s borrowers say they might struggle or fall behind with mortgage repayments if interest rates rise up from 0.5%.
In parallel, the Building Societies' Association revealed in its latest report, that there are around two million homeowners who have never experienced a rate rise. The currency closed for the week at 1.5181.
The Japanese yen opened the week at 119.79 levels against the U.S. dollar. Initially the USD/JPY dropped to 119.21 where it found lots of support.
By the end of the week, the USD/JPY rallied again reaching a high of 121.23 after the Japanese economy posted worse than expected inflation data, giving room for the bank of Japan to possibly implement additional quantitative easing this year.
In the commodities markets, oil prices edged up, boosted by the stronger-than-expected U.S. economic data, though the longer-term outlook for energy markets remains weak due to a global oil supply glut and uncertainty over economic growth prospects in Asia.
Brent crude oil futures, was up 1.02 % to 48.66 Dollars a barrel, while U.S. West Texas Intermediate futures were up 1.98 % at 45.80 Dollars a barrel.
