Forex Blog: Currency Trading News & Analysis.

February 6th 2006

Interest rates continue to drive USD

Last week, the USD surged to one-month highs against both the Euro and the Yen, on the heels of a hike in American interest rates. As this week will not offer much in terms of economic releases, currency traders will likely remain focused on interest rates. A slew of USD-positive economic data has many economists convinced that the Fed will hike interest rates by 25 basis points at its next meeting. Based on credit futures (which serve as a proxy for future interest rates), traders believe there is a 40% probability of such a hike. Traders are expecting the USD to benefit from the building anticipation, and expect a similar surge in the USD to occur if the Fed delivers on expectations. The Wall Street Journal reports:

“The dollar has gotten a lot of strength [last week] alongside a recovery in interest-rate expectations, and we’re likely to see more of that focus on rates and yields,”

Read More: Lack of New Data Is Likely to Crimp Dollar This Week

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© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.