The U.S. dollar continued to be supported by strong consumer price index figures that were released on Tuesday. These results are indicative that the U.S. Federal Reserve (Fed) will continue its measured approach for future interest rate hikes thus adding strength to the U.S. dollar. It was only last year that the U.S. officially renounced its strong dollar policy, letting the greenback slide in an attempt to reduce a record trade deficit. Signs now indicate that this weaker dollar strategy may be coming to the end of its life cycle.
The Japanese yen continued a three-day reprieve on Thursday, giving away to the recent strength of the U.S. dollar. The yen has been on a tear lately. A renewed optimism in the Japanese economy has stirred up interest in the yen over the past few weeks as investors continue to buy not only the yen but Japanese stocks as well. If the deflationary Japanese economy can finally start moving forward it is likely the yen will continue to appreciate. At 11 a.m. the U.S. dollar was trading for 110.7 yen.
The British pound continued upward against the Canadian dollar Thursday morning and was trading at 2.1900 by 11 a.m. With prospects of inflation on the rise in United Kingdom it is unlikely that the Bank of England (BoE) will make another move to lower interest rates in the near future. Retail sales figures released in the U.K. Thursday also support the notion that the BoE will be in no hurry to lower rates any time soon. Many were expecting retail sales figures to drop significantly in July, however the actual decline was insignificant, indicating that the British consumer is still spending, for the time being at least.
Market Report by Bruce Hauser, Chief of Operations
Accu-Rate Corp.
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