Dollar Pressured as Fed Rate Hike Questioned

As the Chinese Yuan continues to be devalued by the People’s Bank of China that has raised speculation that the Federal Reserve might now have to postpone a rate hike. The economic uncertainty for China, as the globe’s second largest economy, and the move by the PBOC, the second in as many days, have brought into question a matter of timing for the Fed. Some analysts believe that an interest rate increase is still in the works for next month, but many believe Janet Yellen and the FOMC could instead take a wait and see position. As a result, the US Dollar Index dropped 0.6% following a decline in US Treasury yields.

As reported at 11:26 am (BDT) in London, the US Dollar Index was trading at 96.5540 .DXY, a decline of 0.76%. In individual trading, the US Dollar remained under pressure with the EUR/USD trading higher at $1.1134, a gain of 0.84% for the Euro. The US Dollar also struggled against growth-linked currencies; the AUD/USD pair was 0.34% higher at $0.7322 while the NZD/USD was trading at $0.6583, a gain of 0.65%.

Yen Demand Driven Higher by Uncertainty

Given the rise in uncertainty over the intentional Yuan devaluation, safe haven demand increased globally, with the Japanese Yen the beneficiary of investors’ concerns. The USD/JPY pair was trading at 124.4105 Yen, down 0.56%.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.