Dollar Rises on Less Dovish Comments From Fed’s Clarida
The dollar rose on Tuesday after less dovish comments from Federal Reserve Vice Chairman Richard Clarida.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.19% to 97.16 as of 10:25 AM ET (15:25 GMT).
Clarida noted in a speech on Tuesday that interest rates are closer to neutral. The central bank should take a gradual approach to rising rates based on data, he added.
“As the economy has moved to a neighborhood consistent with the Fed’s dual-mandate objectives, risks have become more symmetric and less skewed to the downside than when the current rate cycle began three years ago,’’ he said.
His comments helped boost the greenback, which often rises when interest rates are increased.
Meanwhile, the dollar was kept in check by U.S.-China trade worries after President Donald Trump told The Wall Street Journal that it is “highly unlikely” that he will hold off on raising tariff rates on China on Jan. 1.
The dollar was higher against the safe-heaven Japanese yen, with USD/JPY rising 0.11% to 113.71. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.
The euro was also lower due to the stronger dollar, with EUR/USD falling 0.18% to 1.1308.
The pound remained low, with GBP/USD falling to 1.2747 after Trump said the Brexit draft deal is a good deal for the EU, prompting worry that the UK will not be able to trade as easily with the U.S.