Dollar given lift by Fed official’s comments on interest rates

The dollar was given a lift by some upbeat comments from a Fed policymaker who was speaking on Monday. Atlanta Fed President Dennis Lockhart suggested that a rate hike was possible as early as April since the US economy was doing well to justify the case for a hike in interest rates sooner rather than later.

The dollar rose steady against the yen after the comments and popped back above 112.00 yen, recovering from a 16-1/2 month low of 110.67 plumbed last week.

The dollar index last traded at 95.352, pulling further away from a five-month trough of 94.578 set on Friday.
The Fed official’s remarks were welcomed by the markets especially since the US central bank struck a more dovish tone in its latest policy meeting last week. The Fed kept rates unchanged and cut in half the number of projected hikes to a mere two this year.

The euro eased to $1.1246, recoiling from Thursday’s one-month high of $1.1342.

Sterling fell below $1.44, weighed down by political uncertainty in the UK, especially Brexit fears.

In terms of data, Japan released flash manufacturing PMI which contracted to its lowest level in at least three years. The Markit-Nikkei fell to 49.1 in March from 50.1 in February. That is below the threshold of 50 that separates expansion from contraction. Today’s data could strengthen the case for the Bank of Japan to ease policy at its next meeting.

The Australian dollar was buoyed by data showing house prices rose in the final three months of 2015, albeit at a slower pace than the September quarter. AUDUSD rose above $0.76.

Oil prices have enjoyed a multi-week rally as hopes for an output freeze by major producers has helped sentiment recover. WTI oil rose above $41 a barrel.

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