Dollar rises after Fed’s Evans comments on quantitative easing
The dollar rose to an eight-week high on Tuesday, after a top Federal Reserve official struck a hawkish tone and said further quantitative easing may not provide additional lift to the U.S. economy.
The euro touched an eight-week low against the dollar, while the Swiss franc fell to a seven-week trough.
The dollar climbed in earlier trading after parts of Europe imposed new restrictions aimed at curbing surging coronavirus cases.
- In midday trading, the dollar was last up 0.47% at 94.027 versus a basket of currencies. It hit a high of 94.086, its strongest level since late July.
- The euro was down 0.6% against the dollar at $1.1703, after falling below a key $1.17 level, its lowest since late July as well.
- The dollar also gained against the yen, rising for a second day in a row. It was last up 0.38% at 105.04 yen.
Speaking at a virtual meeting of the London-based Official Monetary and Financial Institutions Forum, Chicago Fed President Charles Evans said the U.S. economy risked a longer, slower recovery, if not an outright recession without another fiscal support package. Evans also said he does not see open-ended quantitative easing as providing an important part of the answer. Evans is not a voter at the Federal Open Market Committee this year , but he will be in 2021.
“Evan’s comments were extremely hawkish. He mentioned pausing QE and rates rising before the inflation target is reached. That kind of surprised the market,” said Edward Moya, senior market analyst at OANDA in New York. “The sooner we get to the other side of this virus, you’re going to see rate hike expectations jump up and that should further drive this dollar rebound.”
Reference: CNBC
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