The dollar was once again the best performer of today’s trading, as a study by the San Francisco Federal Reserve pointed out that the market and the public could be underestimating the chances of interest rate increases.
The relatively hawkish tone of the regional Fed study helped the dollar to notch six-year highs against the yen as it traded as high as 106.34, rising above the 106 level for the first time since 2008.
There won’t be too many economic releases to influence the dollar before Thursday’s weekly jobless claims and Friday’s advance retail sales.
Sterling also plunged against the US dollar as an additional survey showed support for the ‘Yes’ campaign in Scotland’s independence referendum gaining momentum. The two camps were about equal in strength, but support for ‘Yes’ was gaining while the ‘No’ vote was shrinking. Cable traded as low as 1.6065 – a 10-month low – on jitters that the referendum will bring about economic uncertainty and low interest rates for longer. UK statistics due out today include industrial output for July as well as trade balance numbers for the same month.
The euro also dipped below the 1.29 level and made a new low of 1.2865, also a 1-year low.
The aussie was also not spared from the US dollar’s strength as it fell to 0.9262. The aussie’s advance against the dollar was again stopped at the 94 cent level as the currency remains in a range.
Later during the day, JOLTS job openings data for July out of the United States will be watched as labor market indicators have gained in significance because of the Fed’s focus on them.