This week we heard from the head of the Federal Reserve, Jerome Powell, that he is confident that the US economy can sustain the stress of the trade conflicts President Trump has started with many countries. This optimism gave a boost to the USD, as well as the stock markets. Right now analysts are betting on another interest rate increase in September, followed by a final one in December this year. The news also has a positive effect on Treasury yields. The dollar index rose to 95.25.
Many other major currencies depreciated against the dollar as a result. The euro slid down to $1.1634, the yen climbed to 113.07, but the British pound sterling was most likely the biggest loser in the situation. In the United Kingdom PM Theresa May is struggling to control her own government and to find support for her chosen route of Brexit. The Bank of England has warned that if the government fails to secure a deal with the European Union, the economy will suffer significantly.
