The dollar rose after Federal Reserve Chair Janet Yellen said the U.S. central bank is on track to raise interest rates this year.
The U.S. currency climbed versus the euro and yen after Yellen said “it will likely be appropriate” for the Fed to boost rates later this year in remarks Thursday in Amherst, Massachusetts. The Fed has kept its target for the federal funds rate at virtually zero since December 2008 to bolster the economy.
“The speech is putting a rate hike back in the equation, so that would boost the dollar,” said Minh Trang, a senior foreign-exchange trader at Silicon Valley Bank in Santa Clara, California.
The dollar strengthened 0.4 percent against the euro to $1.1181 as of 5:39 p.m. in New York. It gained 0.1 percent to 120.18 yen.
“I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2 percent objective,” Yellen said.
The Bloomberg Dollar Spot Index fell 0.6 percent on Sept. 17 after the U.S. central bank decided to keep interest rates near zero. It’s since rebounded 0.8 percent after four Fed officials, including San Francisco Fed President John Williams, made the case for liftoff this year.
“The U.S. dollar is going to continue to offer some relative attraction,” said Katrina Lamb, head of investment strategy and research at MV Capital Management Inc. in Bethesda, Maryland. “It’s the best in a negative environment,” where there are risks to global growth, said Lamb, whose firm manages about $500 million.