Dollar set for biggest weekly drop in six weeks amid sterling surge
Published Jun 28, 2017 01:12PM ET
The pound hit a post-election high against the dollar
Investing.com – The dollar extended losses against a basket of global currencies on Wednesday, pressured by a surge in both the pound and Canadian dollar, after central bank governors from both the Bank of England and the Bank of Canada hinted at tapering current accommodative monetary policy measures.
Bullish comments from central bank bosses concerning monetary policy weighed on the dollar for the second-straight day, as traders speculated that both the Bank of England and Bank of Canada may adopt tighter monetary policy measures soon.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.44% to 95.76.
GBP/USD surged to a post-election high of $1.2973, up more 1%, after Bank of England governor Mark Carney, appeared to reverse his recent assertion that there ‘was no need to raise rates soon’, hinting that a rate hike may be in the pipeline, suggesting that “some removal of monetary stimulus is likely to become necessary”.
Bank of Canada governor Stephen Poloz adopted a similar tone concerning monetary policy, reiterating the central bank may be considering raising interest rates, asserting that rate cuts from 2015 ‘have done their job’.
USD/CAD fell to four-month lows of C$1.3039, down more 1%.
The euro pared earlier losses against the dollar, rising 0.33% to $1.1378, despite European Central Bank (ECB) sources saying markets misjudged ECB president Mario Draghi’s comments a day earlier.
Meanwhile, in the U.S. the Senate’s decision to delay a vote on a health-care bill to repeal and replace Obamacare weighed on dollar sentiment, as investors questioned whether the delay would derail President Trump’s plan to introduce pro-growth economic measures such as tax-reform.
USD/JPY traded at Y112.20, down 0.13%.
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Written By: Investing.com
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