The dollar rose to a seven week high against a basket of currencies on Thursday, after hawkish comments by a Federal Reserve official late on Wednesday encouraged investors to expect a near-term interest rate hike.
Fed Governor Lael Brainard said an improving global economy and a solid US recovery mean it will be “appropriate soon” for the Fed to raise rates.
The remarks come after New York Fed President William Dudley and San Francisco Fed President John Williams rattled investors on Tuesday with more aggressive than expected language about hiking rates.
“We have had this slew of Fed speakers, all of whom seem to be very much favouring a rate hike very soon. It’s entirely Fed-focused at the moment,” said Craig Erlam, senior market analyst at Oanda in London.
Recent labour market and inflation data have also bolstered the case for a rate hike soon.
“We’ve had this great run of data in the US and the expectation on a March rate move has gone up,” said Steven Englander, global head of foreign exchange strategy at Citigroup in New York.