The British Pound steadied a bit on Wednesday after reaching an eight-week high of $1.55372, boosted by overall optimism for the British economy versus its major competitors. The gains are also supported by the expectations of a rate increase by the BoE in early 2016. In Greek news, Finance Minister Varoufakis stated that Greece will not have liquidity issues in the public sector, however they will struggle to make debt payments to the IMF and the ECB.
The Australian dollar dropped more than 20 pips early on Thursday following the worse than expected capex data, and reached a low of $0.78556. The business investment data dropped in the 4th quarter by 2.2%. This outcome increased the expectations for further interest cuts, even as early as next week. The Japanese yen gained some ground against the US dollar. However, it hasn’t been easy for it to determine a clear direction since it hit its lowest point in December.
Fed Chair Yellen stated on Wednesday during the semiannual Monetary Policy Report, that the Fed will be considering any rate increases “on a meeting-by-meeting basis.” She also mentioned a switch in the approach of the rate-setting policy committee; the first step is to remove the word “patient” from the rate increases approach and secondly to add the possibility of rate hikes at any meeting. Yellen’s comments pushed the US dollar lower, especially against the sterling and the Australian dollar.