US Dollar Surges After Fed Signals Faster Rate Rises

The US dollar is strong once again after the Federal Reserve signaled yesterday that although they won’t be raising rates anytime soon, they would move at a faster pace once the takeoff has begun. Policy makers stuck with a long held pledge to hold interest rates near zero for a “considerable time” after they end asset purchases in October. The dollar was stronger against every major currency with the JPY taking the biggest hit falling to its lowest level against the greenback since 2008. American equity markets closed at all-time highs as European and Asian markets were a sea of green amid a quiet data calendar.

All eyes in Europe overnight turned to Scotland where today’s referendum vote gets top billing. The polls remain too close to call as the Scottish people will decide whether or not they wish to remain a part of the United Kingdom, which claimed the small nation in 1707. The British Pound, which had been under considerable selling pressure, continues its rise this morning on headline rumors that the “No” vote is likely to prevail after trailing for much of the past few weeks.

Also out of Europe this morning were the first results of the ECB’s Targeted LTRO, which came out slightly lower than expectations at €82.6 billion. The market was expecting something closer to a €110 billion take-up as it’s possible banks are waiting to see stimulus from the ECB in the form of QE to sell their ABS at more attractive prices. The euro got a slight boost following the results but has since fallen back to previous levels, moving slowly along 2014 lows.

North American data is paced with US weekly jobless numbers and Canadian Foreign Investments. Following a drop in July, foreign investment picked up in August as Canada saw an increase of $5.3 billion, giving a slight boost to the Loonie. The Canadian dollar has been gaining ground each day this week, experiencing a nice correction upward after Tuesday’s manufacturing sales numbers. In the US, jobless claims numbers experienced a move lower, coming in +280k after last week’s +316 print. Building permits and housing starts for August missed by a small margin, negating any boost to the dollar on solid employment numbers. Headlines are sure to drive markets this afternoon with rumors of the Scotland result out in the forefront.

Further reading:

USD/JPY: Trading the Philadelphia Fed Manufacturing Index

US jobless claims fall to 280K, housing data disappoints – USD ticks up