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New
York Fed President William Dudley, a permanent voter on the U.S.
central bank's open market committee and close ally of chair
Janet Yellen, said that the case for tightening monetary policy
"has become a lot more compelling".
John Williams, President of the San Francisco Fed, said that a
rate increase was very much on the table for serious
consideration at the March meeting given full employment and
accelerating inflation.
That drove the return for holding dollars on the debt market
higher, with 10-year Treasury yields last up around 5 basis
points at 2.411 percent.
Money market futures were now pricing in almost a 70 percent
chance of a rise in official interest rates in March, compared
to just over 30 percent on Tuesday.
"The comments from other Fed officials this week have added to
this relatively hawkish bias in rate markets and given the
dollar some support," said Barclays strategist Mitul Kotecha.
Tuesday's expectations that Trump would give details on stimulus
plans that drove stellar gains in the dollar in November were
largely disappointed.
In a speech that contrasted with harsher rhetoric during his
election campaign, Trump said he was open to reforming the U.S.
immigration system and pledged massive tax relief for the middle
class, but did not expand further.
China's yuan, which has been a target for markets given Trump's
previous aggressive talk on trade but which has risen for the
past two months as the dollar's rally stalled, was down just 0.2
percent on the day.
The Mexican peso, seen as the most vulnerable to Trump's
protectionist policies, also took his speech in stride. It was
little changed at 20.066 per dollar.
"Today was 'good Trump' compared to the aggressive 'bad Trump'
shown on Twitter," said Ayako Sera, market strategist at
Sumitomo Mitsui Trust Bank.
The greenback was last up 0.7 percent at 113.60 yen. It gained
0.3 percent against the euro to $1.0544, generating a roughly
half percent rise in the dollar index, which measures the dollar
against a basket of six major peers.
(Additional Reporting by Hideyuki Sano and Yuzuha Oka in Tokyo;
Editing by Mark Trevelyan)
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