Baku. 27 May. REPORT.AZ/ The dollar edged lower on Wednesday after several sessions of gains, as investors awaited comments expected Friday from Federal Reserve Chairwoman Janet Yellen for clues about whether the central bank could raise interest rates soon.
In trading late Wednesday, the euro was up 0.1% against the dollar to $1.1154 and the pound jumped 0.6% to $1.4707, according to FactSet data. The WSJ Dollar Index, which measures the dollar against 16 currencies, was down nearly 0.2%. The dollar was also showing losses against some commodity-linked currencies, including the Brazilian real, Mexican peso and Russian ruble, amid an uptick in oil prices.
The dollar gained slightly against the yen, trading recently at ¥110.2080 for a gain of more than 0.2%.
The consolidation comes after the WSJ Dollar Index rose four out of the past five trading days prior to Wednesday. The dollar got a boost from positive economic data, as well as commentary from some Fed bank presidents that suggested some officials believed the central bank could raise interest rates at its next policy committee meeting in June.
Still, investors will be closely watching Ms. Yellen’s comments on Friday, when she speaks at Harvard University.“Without an endorsement from Fed Chair Janet Yellen, who speaks Friday morning, the idea of a near-term rise in U.S. rates could quickly fade, sinking much of the dollar’s newfound support,” Commonwealth Foreign Exchange said in a note Wednesday.
Higher rates are positive for the dollar because it makes the currency more attractive to yield-seeking investors. The dollar has broadly risen over the past two years as investors expected U.S. rates to rise, though it has given up some of those gains this year amid concerns about economic growth.
Interest-rate futures are reflecting a 32% chance the Fed raises rates at its June meeting, up from 4% last week, according to CME Group.
Analytical Group of Report News Agency believes that, in the first quarter announcement of GDP growth rates in the US closer to the forecasts will have a positive impact on Federal Reserve's decision to raise the discount rate in June or July. This evening it will be announced.As a result, the dollar / euro exchange rate is likely to come down to the level of 1.10 USD/EUR. Notably GDP indicator will be released at 16: 30 Baku time and J.Yellens to speak at 21:15.