Dollar boosted by Yellen and CPI

Posted On 25 May 2015

The new trading week begins with a stronger US dollar after the boost it received from Federal Reserve Chair Janet Yellen’s comments late on Friday. Yellen said that the Fed is on track to raise rates this year as the US economy improves.

The Fed Chief reiterated that jobs data would need to improve. Inflation is also important and it would need to move towards the Fed’s target of 2 percent.

Yellen said that the labor market it is “approaching full strength,” and that unemployment should fall to near five percent by the end of the year.

The dollar surged on Yellen’s comments, rising to a high of 121.76 against the yen.

Hours before Janet Yellen’s speech, the dollar rallied on upbeat inflation data that the US consumer price index, excluding energy and food, rose 0.3 percent on a month-on-month basis, compared to expectations for 0.2 percent . Annually, CPI rose 1.8 percent, closer to the Fed’s inflation target. Headline inflation gained 0.1 percent as expected, meaning overall prices actually fell 0.2 percent year over year.

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