The dollar index—a measure of the USD’s value relative to a basket of foreign currencies—rose to a 6-week high on Wednesday, February 28, 2018, but gave up almost all of its gains later in the week. The US currency was buoyed by new Federal Reserve Bank Chair Jay Powell’s optimistic outlook on the US economy in his first congressional testimony, which corroborated market expectations of more and sooner rate hikes. While gains in the first half of the week had been more or less uniform against most major rivals, exchange rates started to diverge over the last two days. The yen was lifted more than 1% by remarks from Bank of Japan Governor Haruhiko Kuroda on Friday that the central bank would consider ending its ultra-loose monetary policy, if inflation hits its 2% target next year. The pound, on the other hand, continued to be weighed down by ongoing concerns around the Brexit negotiations, ending the week almost 1.5% in the red.
Please refer to figure 6 of the current Multi-Asset Class Risk Monitor (dated March 2, 2018) for further details.