Dollar is currently close to a three-month high against yen after John Taylor’s possible win as the new Fed chief

The surge of dollar

The U.S. dollar was immediately on track for a three-month high against its Japanese counterpart on early Wednesday. The greenback was somehow supported by the news suggesting that the next U.S. Federal Reserve chief is a Stanford University economist.

Last Tuesday, U.S. President Donald Trump hosted a lunch with the Senate Republicans, in an effort to gather their opinions on who he should choose to be the next leader of the U.S. central bank. An unknown source familiar with the subject said the president used a polling system to the Republicans whether they would choose current Fed governor Jerome Powell or professor of economics at Stanford University John Taylor for the position.

The source added that a number of senators are in favor of Taylor over Powell and Trump suggested that he is also considering the idea of appointing the current Fed chief Janet Yellen again. John Taylor is widely perceived to be the one who can incite an interest rate hike faster because he is in favor of a rule-based system on rates.

LGT Bank’s investment strategist Roy Teo said the U.S. currency could be supported sooner if someone had a stance on a non-dovish monetary policy like Taylor.

In reaction to the news, the U.S. dollar may be 0.1 percent lower against the Japanese yen at 113.81 yen but it still not that far from a three-month high it touched last Monday. The index which tracks the value of the greenback against its major peers, the dollar index, remained solid at 93.970 after advancing to its best level since October 6 at 94.017 on the previous session.

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