Dollar gains on rate hike hopes

[NEW YORK] The dollar advanced against the euro and other leading currencies Monday on comments from US central bankers who continue to eye a 2015 interest rate increase.

James Stanley, currency analyst at DailyFX, pointed to quotes from Federal Reserve officials, including St. Louis Fed president James Bullard and Richmond president Jeffrey Lacker, that contained a "hawkish tint towards the additional Fed meetings on the calendar for this year."

The Fed left its benchmark federal funds rate at zero Thursday, dealing a temporary setback to the greenback's climb. There are two remaining Fed policy meetings scheduled this year, in late October and mid-December.

"Overall, the dollar is strengthening," said Vassili Serebriakov of BNP Paribas. "The market is reevaluating its position on the Fed." The euro was under pressure on expectations the European Central Bank could be preparing additional bond purchases, known as quantitative easing, to boost the flagging 19-nation eurozone.

The single currency traded at US$1.1195, down from US$1.1299 Friday.

Kathy Lien of BK Asset Management said all eyes will be on ECB President Mario Draghi's testimony to the European Parliament in Brussels on Wednesday.

"If the head of the European Central Bank confirms that they could boost the quantitative easing program, EUR/USD could test 1.10," she said.

AFP