Mixed outcome follows Janet Yellen’s speech yesterday afternoon

Yesterday’s trading session saw mixed outcomes for currency rates as Federal Reserve Chairlady Janet Yellen gave a dovish speech and dampened investors’ hopes of a rate hike in the short term future. Her dovish tone and comments such as, “Financial conditions in the US had become less supportive of economic growth and could weigh on the outlook should they persist” weighed on the US Dollar yesterday as we saw the greenback fall to a 15 month low against the Japanese Yen as investors piled into the currency considered a safe haven by many, with the Dollar hitting a session low of 113.74 against the Yen whilst down over 1 per cent at the time.

With next month’s interest rate hike now looking more unlikely we saw the US Dollar weaken against the Australian Dollar (down 0.27% trading at exchanging at US$0.7089), the new Zealand Dollar (up 0.3% against the dollar exchanging at US$0.6658) and remain relatively flat versus Sterling which has seen a lot of weakness as of late due to political uncertainty surrounding the potential ‘Brexit’ and weakness amongst European banks, to name just a few.

What can investors expect from this point onwards?

Moving forward I believe we could see further weakness in the greenback currency as the chance of an originally planned March interest rate hike by the fed looks increasingly uncertain, although there is potential for a sharp rebound should rates increase. I don’t expect investors buying Dollars with Sterling to benefit much from this drop in the short term future as I can see Sterling continuing its recent downward trend as speculation surrounding the ‘Brexit’ continues. I would suggest that Euro sellers consider making their transfers sooner rather than later to capitalise on the recent gains made by Euro against both the Dollar and Pound as I don’t expect this trend of a strengthening Euro to rally for much longer, especially as talk of potential further quantitative easing is on the cards.