EG: Pound Rises As BOE Policy Makers Hint At Earlier Rate Hike
By Joseph Adinolfi and Victor Reklaitis, MarketWatch
Dollar trades flat against other rivals
The dollar was little-changed against most of its major rivals Wednesday, with the notable exception of the British pound, which strengthened against the dollar after minutes from a meeting of Bank of England policy makers showed support for an interest-rate hike.
According to the minutes the BOE's monetary policy committee earlier in July, "a number" of policy makers (http://www.marketwatch.com/story/boe-minutes-imply-wider-support-for-rate-rise-soon-2015-07-22) said the decision not to raise interest rates was a close call, suggesting that more officials are in favor of a hike in the short term. Previous minutes showed only two BOE policy makers wanted to hike rates immediately.
"The net take-away from today's release was that the [BOE] is clearly shifting from its neutral stance, and barring any additional geopolitical risk, is likely to start hiking rates this year," said Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, in a note Wednesday. The BOE could even act before the U.S. Federal Reserve, he added.
Last week, BOE Governor Mark Carney said the central bank might be willing to raise rates sooner than previously expected (http://www.marketwatch.com/story/boes-carney-signals-uk-rate-rise-may-come-earlier-than-seen-2015-07-17).
The pound also rose against the euro and yen .
The buck was eyeing a second down day in a row. Currency strategists had blamed Tuesday's drop in part on short-term investors selling the strengthening dollar to lock in profits.
The ICE U.S. dollar index , which tracks the greenback's performance against six rival currencies, was flat at to 97.3500 after sliding 0.7% on Tuesday (http://www.marketwatch.com/story/dollar-poised-to-snap-4-day-winning-streak-2015-07-21). The index has risen 7.8% so far this year.
Despite its recent losses, currency strategists expect the dollar to continue rising in the near term.
The dollar index "has been knocked back down toward 97.40 after running into resistance near 98.35 but remains in an uptrend, with initial support possible near 97.00," said Colin Cieszynski, chief market strategist at CMC Markets, in a note late Tuesday.
The euro was down less than 0.1% against the dollar to $1.0928, while the pound climbed 0.5% to $1.5627. They traded at $1.0937 and $1.5555 late Tuesday in New York.
Meanwhile, the buck fell 0.1% against the yen to Yen123.70.
Trading volume has been subdued so far this week, strategists say, but could pick up when a U.S. existing-homes sales report comes out Wednesday at 10 a.m. Eastern, as well as when a U.S. new-home sales report hits Friday.
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