The US Dollar has found further support following a Trump victory, as Chairlady Janet Yellen testifies to congress amid some of the best employment, housing and inflationary data in decades. Strong data has paved the way to an interest rate hike “relatively soon”.
Markets found further confidence in knowing that Yellen, will not be giving up her post as Chairlady and will continue up until her term ends in 2018.
Investors gear up for a hike in December
With the case for a hike stronger than ever, investors will likely pile funds into the US Dollar which in turn could weaken the Euro. With GBP/EUR now close to 1.17 this trend could be set to continue.
During her speech to congress, Yellen did state that a hike is dependent on data which makes the next big economic releases crucial.
Durable Goods orders
The next big release from the US comes on Wednesday, durable goods provide insights into long term trends in business spending, a positive reading will strengthen the case for a hike further. Economic releases will be watched with scrutiny by investors in the run up to December, which could create major volatility for the US Dollar.
I do however expect the US Dollar to continue to strengthen in the weeks ahead, which could benefit the Pound against the Euro also.