The dollar strengthened against its peers today on the back of remarks from Federal Reserve Chair Yellen which indicated the central bank will in all likelihood increase its key interest rate before the end of this year. In testimony to the House Financial Services Committee Yellen also stated that the US labor market has improved although there is still room for growth, and that Greece’s debt crisis along with the recent decline in China’s stock market may jeopardize US economic growth. The Empire State Manufacturing Index jumped from a reading of -1.98 in June to 3.86 in July while experts forecast a reading of 3.00. US producer prices increased by 0.4% in June beating forecasts for a 0.2% increase.
The euro weakened against the dollar with the pair down 0.50% trading at 1 week lows of 1.0953 as the Greek government took steps to pass needed legislation required by its creditors to secure its 3rd bailout. Greek Prime Minister Tsipras faces an uphill battle in gaining support from his ruling party which is against austerity for these strict measures of reform.
The pound weakened against the dollar with the pair down 0.26% trading at 1.5595 following the release of data which revealed that the UK unemployment rate inched up from 5.5% in the 1st quarter to 5.6% in the 2nd quarter. Experts had forecast the unemployment rate to be unchanged marking its first uptick since the beginning of 2013. The number of individuals filing for jobless claims increased by 7,000 while analysts had forecast a decrease of 8,800.
The yen weakened against the dollar with the pair up 0.43% trading at 123.92 near its session high of 123.95. The pair was back trading in a tight range of less than 1 big figure having reached 2.5 week highs as dollar demand intensified on the back of remarks from Federal Reserve Chair Yellen. As was widely expected by the market the Bank of Japan maintained its current monetary policy.
The Australian, New Zealand and Canadian dollars weakened against the greenback. The Aussie was down 0.66% against the dollar with the pair trading at 0.7405. The kiwi dropped 1.24% against the dollar with the pair tanking to new 5 year lows of 0.6628. The loonie declined against the greenback with the pair surging 1.35% trading at a 6 year plus high of 1.2904 following the release of data which revealed that Canada’s manufacturing sales increased 0.1% in May compounding forecasts for a 0.4% increase. Export associated currencies were hardly affected by data which revealed that China’s GDP grew by 7.0% in the 2nd quarter ahead of forecasts for an increase of 6.9%.
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