Dollar index reaches its highest since mid-May. Against other currencies, dollar has reached one-month high on Tuesday; reason being it was thought that Federal Reserve may increase interest rates again this year. Sterling went down as Bank of England’s head paused the enthusiasm of people on the point of its close to raising rates
William Dudley, New York Fed President said that betterment in labor market of US would lighten up inflation. Inflation can cause another rate hike till the year ends. Already the country has faced two hikes in this year.
Key overnight borrowing costs were increased by US central bank from quarter point to 1.00-1.25 percent on last Wednesday. As per senior currency strategist at TD Securities in New York Mazen Issa the last week was aggressive, and the reaction on dollar getting oversold was quite delayed.
After Fed meeting held last week, caution was issued by some policy makers related to rate increase in upcoming month on basis of disappointing inflation information.
As per Chicago Fed President Charles Evans they will wait till the year ends to make the decision to increase interest rates again or not.
Yen and four more currencies increased by 0.3% at 97.811, which was also the most since May 18. Dollar was better in comparison to British pound. When BoE Governor Mark Carney said that it is not the time to increase interest rates in U.K, dollar raised more than a cent against pound.