Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Higher; Yellen Raises Interest Rate Hike Concerns

ForexMay 05, 2021 03:02AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Peter Nurse - The dollar pushed higher Wednesday, boosted by talk of higher U.S. higher interest rates while a selloff in tech stocks raised its safe haven appeal.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.4% at 91.308, pulling away from its recent two-month low of 90.422.

EUR/USD traded down 0.1% at 1.2007, heading back down to its key 1.20 pivot, GBP/USD was up 0.1% at 1.3893, as investors await the Bank of England policy decision on Thursday. USD/JPY rose 0.1% to 109.46, while the risk-sensitive AUD/USD rose 0.1% to 0.7715.

This bounce in the dollar came in the wake of comments from U.S. Treasury Secretary Janet Yellen suggesting rate hikes may be needed in the near future.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said at a virtual meeting Tuesday. “Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

Yellen later tried to row back on the significance of these remarks, but the mere mention of U.S. tightening spooked a market that has become so influenced by the Federal Reserve’s monetary stimulus.

The tech-heavy Nasdaq Composite slumped on Wall Street as investors dumped the giant tech stocks on concerns their valuations would be hit in a rising interest rates environment.

Investors are now looking to the ADP National Employment Report, due later in the day, and the April employment report, including non-farm payrolls, due on Friday. Additionally, the ISM Non-Manufacturing Purchasing Managers Index is also due later Wednesday.

“The U.S. is now about to reap the growth rewards of the experimental policy mix of massive money printing and wide scaled fiscal stimulus,” said analysts at Nordea, in a note. “The US is likely to outperform all peers growth-wise this year, which over time usually leads to a stronger USD versus other currencies as a result of the side-effects of a stronger growth pace. “

The bank targets 1.15-1.16 in EUR/USD in the second half of the year.

Elsewhere, USD/INR rose 0.3% to 73.95 after India’s central bank announced loan repayment relief as well as steps to boost credit to key sectors as the country struggled from the world’s worst outbreak of the Covid-19 virus.

EUR/NOK trades 0.1% lower at 10.0026 and USD/NOK is flat at 8.3345 ahead of the latest policy-setting meeting by Norway’s central bank. 

The Norges Bank is widely expected to maintain its key rate at zero, and “we are most interested in how they assess the latest vaccine news and the outlook for the reopening of the Norwegian economy. This is clearly the most important factor for when the first rate hike will occur,” said Nordea.

Poland's central bank is also due to meet later, amid speculation that it will change its guidance to reflect an earlier tightening of monetary policy than previously expected.

Dollar Higher; Yellen Raises Interest Rate Hike Concerns

Related Articles

Dollar climbs as Evergrande uncertainty percolates
Dollar climbs as Evergrande uncertainty percolates By Reuters - Sep 24, 2021 4

By Chuck Mikolajczak NEW YORK (Reuters) - The dollar rose on Friday and was poised for its third straight week of gains against a basket of major currencies, as uncertainty over...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Aw wright
AndrewJW May 05, 2021 6:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I fail to see why everyone is shocked by these potential revelations; what did they expect, you cannot keep printing these billions a day in a recovered economy and not expect that hyperinflation is coming. Those deluded with this 1 sided EBB thinking it’s normal are going to get a very sharp shock; this is a reaction to Covid, not a financial response… they either announce tapering this month or the US heads for Hyper
William Bailey
William Bailey May 05, 2021 4:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hmmm, gonna take 5-6 trillion in printing over the next year to maintain this stimulus / tax cut/ QE fueled market! However, print that and the economy comes to a grinding halt . Billionairs will lose either way and get taxed to keep thr pitchforks and torches from coming out .... what to do ? Maybe stop the printing and lose market value and let property prices come back down ... that way no pitchforks and torches. Wallstreet/Yellen/Powel /Billionairs/ upper middle class with maxed credit. Stop the greed and think about the other 93percent that will skewer you on a pitchfork when you take everything from them
Chris Fran
Chris Fran May 05, 2021 4:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
if there was no money injection, gdp would be 1.5%. Keynes knew this 90y ago and so do most modern economists now which is that you spend your way out, hoping to control it. the alternative is snail pace recovery
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email