Richwill – The dollar moved higher against a basket of other currencies on Tuesday as investors continued to digest a slew of comments out from Federal Reserve (Fed) officials and further promises for the U.S. to come through on tax reform this year, while cable came under pressure on dovish remarks from Bank of England (BoE) governor Mark Carney.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.14% at 97.37 by 10:36AM ET (14:36GMT).
With no major economic reports on Tuesday’s schedule, the dollar continued its upward trend, jump-started on Monday by hawkish remarks made by influential New York Fed chief William Dudley who reinforced expectations for the Fed to keep raising interest rates.
However, Chicago Fed president Charles Evans did deliver a more dovish outlook after the market close on Monday, suggesting that it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise rates again.
On Tuesday, Fed vice chair Stanley Fischer did not address the outlook for U.S. monetary policy or the economy when he spoke in Amsterdam earlier in the day.
Boston Fed president Eric Rosengren also did not specifically discuss future plans for the removal of accommodation or the economic outlook, but did warn Tuesday that “monetary policy is less capable of offsetting negative shocks when rates are already low.”
The Dallas Fed Robert Kaplan will speak in San Francisco at the Commonwealth Club of California later at 3:00PM ET (19:00GMT).
Market players remained skeptical that the Fed would move again this year. According to Investing.com’s Fed Rate Monitor Tool, Fed fund futures priced in the odds of a rate hike in September at only 18% while an increase by December remained below the 50% threshold at around 41%.
Perhaps adding to bullish sentiment in the dollar, both U.S. Treasury Secretary Steven Mnuchin and House Speaker Paul Ryan, prominent actors in the Republican tax reform debate, vowed that President Donald Trump would get tax reform done in 2017.
Part of the increase in the dollar index was undoubtedly due to weakness in the pound.
Cable started Tuesday to the downside, falling back below 1.27, as BoE governor Carney said that it was not the appropriate time for the British monetary authority to raise interest rates.
GBP/USD last fell 0.8% to 1.2636 at 10:36AM ET (14:36GMT).
Meanwhile, the euro and yen kept losses in check, trading near the unchanged mark.