Now that the uncertainty over Greece has been eliminated, markets will be refocusing their attention on to the United States. There they will examine, given this newest factor which relieves some significant global risk, how the Federal Reserve might also be refocusing. Specifically, they will ponder how the Fed might now consider the timing of a rate hike. The hope, at least among Dollar bulls, is that the Fed might pull a rate hike forward, back into this year. Analysts point out that though the Greek deal is Euro positive it signifies that a major constraint for the Federal Reserve Bank’s plans to move toward a tighter monetary policy has been removed. Thus, the Greek deal is also, in a way, Dollar positive.
As reported at 11:37 am (BDT) in London, the EUR/USD was trading at $1.1078, moving away from the session peak of $1.1198 and edging closer to the daily low at $1.1057. The USD/JPY struck a 11-day peak at 123.44 Yen, before easing back to the current 123.3180 Yen. The US Dollar Index, viewed by investors as a good gauge of the greenback’s relative strength, was trading at 96.273 .DXY, a gain of 0.26%.
Yellen to Provide More Insight
Analysts continue to see data as the main driver of Fed policy, but Janet Yellen’s testimony before the US Congress will provide additional insight. On Friday, Ms. Yellen said that she foresaw a rise in interest rates in 2015. The president of the Boston branch of the Federal Reserve, who is widely considered a dove, thought September was possible for a rate hike. Of course, that is all provided that the economic data continues to support it.