EUR/USD
The euro fell to a fresh 14-month trough against the broadly stronger dollar on Friday as expectations that the Federal Reserve is moving closer to raising U.S. interest rates continued to bolster demand for the greenback. The dollar has rallied in the past two months, boosted by expectations for an early hike in U.S. interest rates, while the European Central Bank looks likely to stick to a looser monetary policy stance. The euro has remained under pressure against the dollar since the ECB unexpectedly cut rates to record lows across the euro zone earlier this month, and implemented fresh measures in an attempt to shore up inflation in the currency bloc. On Thursday, euro area lenders borrowed less than expected from the ECB under its new low cost loan program.
GBP/USD
The pound turned lower against the broadly stronger dollar on Friday, coming off the two-week highs hit earlier in the session after voters in Scotland’s independence referendum elected to remain inside the United Kingdom. The pound was initially boosted after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call. A total of 55% of voters voted to reject independence, while 45% voted in favor of it. Sterling slumped to 10-month lows against the dollar earlier this month as uncertainty over the Scottish referendum rattled financial markets.
USD/JPY
The dollar rose to fresh six-year peaks against the weaker yen on Friday as expectations that the Federal Reserve will raise U.S. interest rates more quickly than expected continued to fuel investor demand for the dollar. The dollar has rallied in the past two months as economic data indicated that the U.S. recovery is progressing strongly, while growth in Japan appears to be faltering. The yen remained under heavy selling pressure amid expectations that the faltering recovery in Japan will prompt the BoJ to implement additional stimulus measures to shore up growth. Earlier this month BoJ Governor Haruhiko Kuroda said the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
