- Lockhart joins Williams, Bullard, Lacker in rate-rise talk
- U.S. currency rises against euro and other major peers
The dollar climbed to a two-week high after Federal Reserve officials made the case for an interest-rate increase this year, adding to the relative allure of debt denominated in the U.S. currency.
The currency rose for a second day against the euro and strengthened against its major peers. Fed Bank of Atlanta President Dennis Lockhart said he remains confident the central bank will raise interest rates this year, even as recent market volatility raised risks to the economic and inflation outlook. That follows explanations from three other policy makers over the weekend who gave their rationale for enacting a rate increase at one of the Fed’s two remaining meetings of 2015.
“This dollar rally could have legs,” said Matt Weller, an analyst at Gain Capital Holdings Inc.’s Forex.com unit in Grand Rapids, Michigan. “The Fed speakers are trying to guide the market back to a potential rate hike in December” after an “overreaction” to their decision to keep interest rates near zero last week, Weller said.
The dollar gained 1 percent to $1.1190 per euro and was up 0.5 percent at 120.56 yen as of 5 p.m. in New York. The Bloomberg Dollar Spot Index rose 0.5 percent to 1,207.56.
“I put most of the decision weight on prudent risk management around recent and current market volatility,” Lockhart said in a speech in Atlanta Monday, referring to his vote backing the Fed’s decision. “As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. I am confident the much-used phrase ‘later this year’ is still operative.”
San Francisco Fed President John Williams, a policy centrist who has worked closely with Chair Janet Yellen, said Sunday it was a close call to delay a rate rise at last week’s Federal Open Market Committee meeting.