US Dollar Rises Post Federal Reserve Comments

Edited By Barsha B. Baruah

USD gains against Euro, GBP, and Japanese yen; EUR/USD falls 0.29%

The U.S. dollar finished to its 11-month high against the Euro on Friday, August 22, 2014, following the comments made by the Federal Reserve’s Chairperson Janet Yellen and ECB’s (European Central Bank) President Mario Draghi.

The demand for the U.S. dollar consolidated after the Fed’s chair stated in the annual meeting of top central bankers and economists that the U.S. economy is recovering and added that the labor market is also showing signs of improvement. Meanwhile, European Central Bank President Mario Draghi announced that the bank is likely to implement unconventional economic measures to propel growth in the sluggish Eurozone economy.

Fed Chair, during her speech stated that the job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years. She further remarked that the unemployment rate, at 6.2% in July, has declined nearly 4% points from its peak in late 2009. Over the past one year, the unemployment rate has declined significantly, and at a higher than expected pace.

During the trading session on Friday, August 22, 2014, the EUR/USD pair oscillated between 1.3221 and 1.3297, before setting at 1.3242, down 0.29%, as indicated in the graph below. For the week, the Euro/USD pair fell by 1.33%. At the time of last reporting, the EUR/USD was trading at 1.3193, down 0.03%.

Source: Bloomberg
Source: Bloomberg

The Eurozone and the U.S. are scheduled to release key economic data in the forthcoming week, which are likely to cause significant movements in the currency market. Analysts will factor the outcome of data releases by both these economies, while keeping a close track of the following events:

  • On Monday, August 25, 2014, in the Eurozone, Germany is slated to produce Ifo Institute for Economic Research report on business climate index for the month of August. While, the U.S. is to produce data on new home sales for July.
  • On Tuesday, August 26, the U.S. is scheduled to publish reports on durable goods orders for July as well as house price inflation and consumer confidence.
  • On August 27, Germany is to publish the Gfk report on consumer climate for September.
  • On August 28, in the Eurozone, Germany is to publish preliminary data on consumer price inflation, as well as a report on unemployment for the month of August. Meanwhile, on the same day, the U.S. is to release revised data on second quarter GDP (Gross Domestic Product), data on pending home sales for July and its weekly government report on initial jobless claims.
  • Finally, on August 29, the Eurozone is to publish preliminary data on consumer inflation and unemployment, while the Germany is to release data on retail sales. On the same day, the U.S. is slated to report data on personal income and expenditure as well as the University of Michigan preliminary data on consumer sentiment.


The GBP moved lower against the U.S. on Friday, August 22, 2014, following the statements made by Fed Chair Janet Yellen, indicating significant improvements in the labor market. However, the geopolitical concerns in Ukraine triggered profit booking later on Friday, keeping a check on the greenback’s gains. Earlier this week, the U.S. dollar had marched to its four-and-a-half month high against the GBP, on the back of disappointing UK inflation data, which overshadowed the recent comments by (BoE) Bank of England Governor Mark Carney.

On Friday, August 22, 2014, Fed Chair Janet Yellen stated that the U.S. economy is creating more job opportunities, as the payroll employment in May of this year, exceeded the previous peak in January 2008.

Meanwhile, on Thursday, last week, a data report showed that the existing home sales in the U.S. increased by 2.4%, to 5.15 million units last month from 5.03 million units in June, exceeding analyst estimates for a decline of 0.4% to 5.02 million units in July 2014. In addition, the U.S. Department of Labor reported the number of individuals filing for initial jobless benefits in the week ending August 16, 2014, fell by 14,000 to 298,000 from the previous week’s revised total of 312,000.

During the trading session on Friday, August 22, 2014, the GBP/USD pair fluctuated between 1.6562 and 1.6597, before finishing the session at 1.6572, down 0.05%, as shown in the graph below. For the week ended August 22, the Euro/USD pair declined 0.71%. At the time of last reporting, the GBP/USD was trading at 1.6564, up 0.10%.

Source: Bloomberg
Source: Bloomberg

In the forthcoming week, the U.K. and the U.S. are scheduled to report a series of key economic data. The currency experts will be keeping a close watch on the following data releases while framing their trading strategies.

On Friday, August 29, 2014 the U.K. is to report private sector data on house price inflation as well as a report on business investment.


Similarly, on the back of upbeat comments from the Fed’s Chair Janet Yellen, the US dollar rose to its seven-month high against the Japanese yen on Friday, August 22, 2014.

  • On Friday, August 22, the USD/JPY pair oscillated between 103.50 and 104.19, before finishing the day at 103.95, up 0.09%, as shown in the graph below. At the time of final reporting, the USD/JPY was trading at 104.20, down 0.01%.
Source: Bloomberg
Source: Bloomberg

Moving ahead, the USD/JPY pair is likely to fluctuate ahead of significant data releases by Japan in the coming week. Industry experts will be looking forward to changes in the relative price of the U.S. and the Japanese yen in the coming week, ahead of the series of key data releases.

On Friday, August 29, Japan is to release data on consumer inflation, household spending and retail sales as well as reports on industrial production.

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