The US dollar rebounded on Friday after Federal Reserve Chair Janet Yellen hinted at the possibility of a hike in interest rates later this year. Her comments arrived just one week after the Fed said it was holding off on a rate hike.
The dollar index rose to 96.318, up from 95.458. The euro slid 0.6% to $1.1168.
On Thursday, Yellen said she expected the Federal Reserve to raise rates in late 2015. She noted that rate increases were only like if inflation remained stable and the US economy remained strong enough to continue offering jobs.
“The comments were hawkish relative to post-FOMC market pricing, and have supported the USD in early Asia hours,” analysts at BNP Paribas wrote in a note to clients.
“We think markets remain under-priced for Fed Q4 policy tightening and continue to see scope for the USD to extend gains as markets shift towards our view.”
The US dollar increased against the yen to 120.20.
Keep an eye out today for comments from Federal Reserve Bank of St. Louis President James Bullard. He will participate in a discussion on “New Directions in Monetary Policy.”