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EUR/USD tumbles as Yellen remarks boost dollar
The euro tumbled against the dollar on Wednesday after Federal Reserve Chair Janet Yellen said a December rate rise remains a “live possibility”.
The single currency tumbled 1.1 per cent to $1.0845, its weakest level in three and a half months.
While the prospects of the US Federal Reserve raising interest rates for the first time in nearly a decade sent the dollar higher against most major currencies on Wednesday, the euro is suffering more than most.
Support for the euro has been fading fast following comments from European Central Bank president Mario Draghi last month that more monetary easing could be on the way.
The euro has fallen 5.6 per cent against the pound since mid-October. Against the greenback it is down some 5.4 per cent.
The diverging monetary policies of the European Central Bank and the Federal Reserve are weighing on the euro. As a result, many analysts are expecting the euro to hit parity against the dollar over next 12 months.
GBP/USD was steady in Asian trading on Thursday in a tight 1.5378-96 range, with focus on the Bank of England meeting later in the day.
USD/JPY remained buoyant but fell back a bit from the 121.72 spike high of Wednesday when it rallied on Fed Chair Janet Yellen’s remarks that raised the chances of a rate hike by the Federal Reserve in December. Also the greenback was lifted by upbeat jobs data released on Wednesday. A report from payroll processor ADP showed that the US private sector created 182,000 jobs last month. Economists expected to show an increase of 180,000 jobs.
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