- USD rallies after Yellen’s comments on rates
- Stocks and gold suffered due to USD’s strengths
- EURGBP falls sharply as UK manufacturing PMI hit a record high
USD hit a two-week high on Tuesday after US Treasury Secretary Janet Yellen’s comments on interest rates, saying that the rates may need to rise or else the economy may be overheating. She made a comment during an economic seminar presented by The Atlantic, and her comment was likely to be part of Biden’s economic investment programs. Although she later downplayed the importance on her words, markets reacted sooner than expected. As a result, USD strengthened – despite only slightly, it kept the uptrend started last Friday and currently trades around that level, around 91.206 at press time.
On the other hand, stocks dipped heavily, with the Nasdaq Composite down for about 1.88% and S&P 500 more than 1%. XAUUSD, the gold spot price, was also down on Wednesday morning in Asia to $1,780.52 after Yellen’s comment. Some analyst said that, much of the good news has likely already been priced in at this point. Therefore, surprises are no longer skewed toward the positive side. In other words, negative information is more likely to shake the market than positive comments, which are largely expected by most investors.
EURGBP fell sharply today and currently fluctuates around 0.8643. The dip was largely attributable to positive UK data, as April’s manufacturing PMI beat estimates and landed at 60.9, versus the prior release at 58.9 and forecast at 60.7. This is also the highest reading since July 1994. Moreover, new factory orders rose at the fastest pace since November 2013 and two-thirds of businesses expect higher production this year. However, the data also revealed that, lengthening delivery time and rising commodity prices are among the major concerns, a similar picture compared with that in the US.