The dollar hit a one-month high against the yen on Monday and stood tall against other peers after comments by Federal Reserve Chair Janet Yellen enhanced the prospects of a near-term US interest rate hike.
In addition to the latest round of hawkish-sounding comments from Yellen, political developments in Tokyo were also seen supporting the dollar against the yen.
The dollar stood tall after the Fed chair had said on Friday a rate increase in the coming months “would be appropriate’’, if the economy and labour market continued to improve.
Yellen’s rate hike endorsement was just what the currency market was looking for to take the already-bullish dollar yet higher after a recent run of upbeat US economic indicators and comments from top Fed officials that supported a near-term tightening.
The dollar index hit a peak of 95.940, its highest in two months.
The euro touched a 2-1/2 month low of $1.1097 on Monday and last traded at $1.1104, down 0.1 percent.
The greenback poked above 111.00 yen for the first time since late April, reaching 111.03 yen at one point, and was last up 0.5 per cent at 110.97 yen.
Dollar Bull Bets Jump Most in Six Months on Fed Signals: Chart
Hedge funds and other large speculators increased bullish bets on the dollar by 78,083 contracts in the week ending May 24, the biggest jump since November, to a net long position of 67,430, according to data from the Commodity Futures Trading Commission.
The Bloomberg Dollar Spot Index has climbed 3.6 percent this month, set for the biggest gain since September 2014, as the odds that the Federal Reserve will raise interest rates in June more than doubled to 30 percent.
Fed's Bullard says global markets seem well-prepared for summer rate hike
St. Louis Federal Reserve President James Bullard said on Monday global markets appear to be "well-prepared" for a summer interest rate hike from the Fed, although he did not specify a date for the policy move.
"My sense is that markets are well-prepared for a possible rate increase globally, and that this is not too surprising given our liftoff from December and the policy of the committee which has been to try to normalise rates slowly and gradually over time," Bullard told a news conference after speaking at an academic conference in Seoul.
"So my ideal is that if all goes well this will come off very smoothly."
Bullard added a rebound in U.S. GDP growth seems to be materializing in the second quarter, but reserved his opinion on whether the Fed should hike in June or July for the next policy meeting at the U.S. central bank.
His comments followed revised data on Friday that showed first quarter growth in the U.S. was not as weak as initially expected.
Responding to the GDP data, economists said strong income growth, together with signs the economy was picking up steam in the second quarter, could give the Federal Reserve ammunition to raise interest rates as early as next month.
Answering a question on whether he thought U.S. presidential candidate Donald Trump would bring change to monetary policy if elected, Bullard said the Fed was independent and did not follow any particular political prescription.
"I don't think a change in the White House either way will affect Fed policy," he said. "My hope is that neither campaign is interested in politicizing the Fed."
Meanwhile, Bullard noted he had been critical of the Fed's "dot plot" summaries of policymakers rate outlooks recently, saying they may be giving too much forward guidance, removing the Fed's ability to make data-dependent decisions.
Most economists say Brexit will harm economy: poll
Nine out of 10 of Britain's top economists working in London's City financial district, small business and academia believe the economy will be harmed if Britain leaves the European Union, a poll said on Sunday.
The poll, which the Observer newspaper said was the biggest of its kind drawing responses from more than 600 economists, is a boost for Prime Minister David Cameron, who is leading the campaign for Britain to stay in the 28-member bloc at a referendum on June 23 despite opposition from some in his party.
Carried out by pollster Ipsos-MORI, the poll found that 88 percent of those asked said an exit from the EU and the single market would most likely damage Britain's growth prospects over the next five years and 82 percent said there would probably be a negative impact on household incomes.
Oil prices dip on strong dollar, rising Canadian output
Oil prices dipped on Monday as a strong dollar weighed on markets and Canadian oil sands production was expected to increase this week.
Crude markets, however, did receive some support from the start of the U.S. summer driving season coinciding with a fall in U.S. crude output to its lowest since September 2014.
An expected rise in Canadian oil sands production also weighed on WTI, traders said. Oil producer Suncor Energy (SU.TO) is planning to ramp up output at its fields in Alberta this week after it was forced to shut them down earlier in May due to massive wildfires.
Despite the expected rise in Canadian output, ANZ bank said that WTI price support "still lingers" after a large fall in U.S. oil inventories by 4.2 million barrels to 537 million barrels due to strong demand.
Attention will also be on a meeting by the Organization of the Petroleum Exporting Countries (OPEC) in Vienna this week, although most analysts do not expect any decisions that would lead to changes in production.
Reference: Reuters, Bloomberg
Thai
Eng