Dollar finishes higher against its chief rivals in May

 USA, May 29 – 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 in May, after the buck snapped a nine month winning streak by finishing lower against the euro in April. The euro EURUSD, +0.4019%  traded at $1.0980 late Friday in New York, down 2% this month; the pound GBPUSD, -0.1502%  shed 0.4% to $1.5277; the dollar USDJPY, +0.15%  strengthened 3% to ¥124.08; and the Canadian dollar CADUSD, -0.1445%  weakened 3% to 80.37 cents.

A meaningful recovery in U.S. economic data, beginning with the nonfarm payrolls report for April, 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 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.

Source: marketwatch.com