This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Yellen May Just Have Pushed the Dollar Into a Bull Market vs. the Euro

NEW YORK (TheStreet) -- It seems as if the market is turning to favor the U.S. dollar. The market for euros in terms of dollars has fallen below $1.3600, and Thursday euros have been trading as low as $1.3438. There is even some chatter around the market that this rate may fall as low as $1.3200 by the end of this year.

This is a different market feeling today than two weeks ago, when the U.S. dollar was not so strong against the euro. The difference seems to be the recent testimony before Congress of Federal Reserve Chair Janet Yellen.

The key statement made by Yellen: interest rates may rise sooner than expected.

Read More: Comcast Wins All the Battles but Risks Losing the War Against Internet Core

Although relatively benign, the tone of her comments has received a great deal of attention and, given the situation faced by Mario Draghi, President of the European Central Bank, has been taken as a signal that the U.S. dollar should become stronger in the near term.

Last month Draghi and the ECB dropped interest rates, lowering one policy rate below zero. Furthermore, there is still major concern that the eurozone may fall back into recession, which would put pressure on the Central Bank to consider further easing measures -- even to consider the possibility of creating its own brand of quantitative easing.

Yellen, in her testimony, alluded to the fact that the economic recovery in the U.S. might be recovering more rapidly than had been thought recently. This might contribute to the need for interest rates to rise sooner than previously expected.

U.S. monetary policy would become tighter relative to European monetary policy. And this tends to result in the value of the currency of the tighter-money country rising against the currency of the easier-money country.

We might be at a turning point for the value of the U.S. dollar.

Read More: How Teva Pharmaceutical Is Attacking the Generics to Defend Its Turf

The question is: what will be the timing of the interest rate rise in the U.S.?

I am concerned about the reason for a rise in interest rates, too. Right now, officials at the Federal Reserve seem to be thinking that short-term interest rates will begin to rise by the middle of 2015. And the general assumption seems to be that the Fed will cause that rate rise.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs