Comments by Federal Reserve chief Janet Yellen that an interest rate increase will likely be appropriate “relatively soon” gave a further shot in the arm to the dollar yesterday.
In testimony prepared for delivery to the Joint Economic Committee of Congress, Yellen said a rate hike would be appropriate as long as there is further evidence of progress in the economy.
The comments sent the dollar climbing against the yen and the euro as it reinforces expectations among analysts that the Fed will hike rates at the December 13-14 policy meeting, one year after the first and only rate increase following the financial crisis.
“The dollar is enjoying another resurgence after somewhat of a lull yesterday, with Janet Yellen’s hawkish comments further raising expectations of a December hike,” said market analyst Joshua Mahony at online trading firm IG.
Yellen also vowed yesterday to serve out her four-year term until it expires at the end of January 2018, despite president-elect Donald Trump’s criticism of her performance.
She reaffirmed in comments to lawmakers the prevailing market view that the Fed’s monetary policy committee will raise interest rates next month.
She noted that since the last meeting: “I do think that the economy’s making very good progress toward our goals and that the judgment the committee reached in November still pertains.”
CMC markets market analyst Jasper Lawler pointed to comforting data for the Fed such as housing starts jumping 25.5% to a nine-year high and the lowest weekly unemployment claims since 1973.
The dollar has been on a rally since Trump’s surprise election win last week as his presidential plans include boosting infrastructure spending and cutting taxes, measures that would increase inflation, with interest rates likely to follow. 
Higher rates would encourage investors to shift funds to the United States from places where ultra-low rates are set to continue, like the eurozone and Japan.
Equities, despite usually not benefiting from higher interest rates, made small gains in Europe while Wall Street was mixed approaching midday.
London’s FTSE 100 yesterday gained 0.7% at 6,794.71, Frankfurt’s DAX 30 rose 0.2% at 10,685.54 and in Paris, CAC 40 was up 0.6% at 4,527.77. 
Investors have been struggling to ascertain the outlook for the global economy under a Trump presidency after his rhetoric regarding trade agreements and spending plans.
On oil markets, traders were waiting to see if the Opec producers cartel could hammer out a deal to cut crude output.
The commodity surged this week on news the group and Russia were pushing for an agreement before its twice-yearly meeting on November 30.