By Joseph Adinolfi, MarketWatch , Hiroyuki Kachi
The dollar finished the month higher against its main rivals,
the euro, Japanese yen and British pound, on Friday, supported by a
rebound in U.S. economic data and reassurances from Federal Reserve
Chairwoman Janet Yellen that the central bank will likely raise
interest rates in 2015.
The dollar rally reasserted itself
(http://www.marketwatch.com/story/euro-dollar-parity-is-back-on-the-table-2015-05-28)
in May, after the buck snapped a nine month winning streak by
finishing lower against the euro in April.
The euro (EURUSD) traded at $1.0980 late Friday in New York,
down 2% this month; the pound (GBPUSD) shed 0.4% to $1.5277; the
dollar (USDJPY) strengthened 3% to Yen124.08; and the Canadian
dollar (CADUSD) weakened 3% to 80.37 cents.
A meaningful recovery in U.S. economic data, beginning with the
nonfarm payrolls report for April,
(http://www.marketwatch.com/story/us-jobs-creation-springs-back-in-april-with-223000-gain-2015-05-08)
coupled with a reassuring statement from Yellen saying implying
that the Fed intends to raise rates this year dispelled worries
that the central bank might wait until 2016.
Higher interest rates typically draw foreign flows into a given
currency, helping it strengthen against its rivals, by increasing
the yield on deposits held in that currency.
Several analysts, including Minh Trang, senior FX trader at
Silicon Valley Bank, said that Monday's April durable-goods report
helped rally support for the dollar.
"[The dollar] has been relatively strong since we had the
nonfarm payrolls for april. The trend for the dollar continues to
be pretty solid." Trang added that next week's nonfarm payrolls
report for May will likely have a big impact on the dollar.
Economists expect the report to show 218,000 jobs were created
in May, according to a consensus forecast from a survey conducted
by MarketWatch.
During the past week, the dollar broke out of a narrow trading
range against the yen
(http://www.marketwatch.com/story/heres-whats-driving-the-dollar-yen-trade-2015-05-28)
that it had held for about four months.
Conflicting reports about the progress toward a bailout
agreement between Greece and its creditors weighed on the euro for
most of the past week.
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