Dollar wallows near four-week lows as Yellen sounds cautious note
The dollar edged up but still wallowed close to four-week lows against a basket of currencies on Tuesday, after Federal Reserve Chair Janet Yellen’s remarks failed to toss a lifebuoy to the recently foundering greenback.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, nudged up 0.1 percent to 94.017, but it remained within sight of its overnight low of 93.745, its weakest level since May 11.
While Yellen remained relatively optimistic about the overall U.S. economic outlook and said the Fed would hike interest rate hikes, she gave no fresh hints about timing, and called last month’s U.S. jobs data “disappointing.”
“She was upbeat, but compared to her speech on May 27, when she said a move would be appropriate ‘in coming months,’ she wasn’t specific about timing,” said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
The dollar has been under pressure since the U.S. nonfarm payrolls report on Friday showed the slowest job growth in more than five years in May, quashing expectations for a near-term U.S. interest rate hike.
Even before Yellen spoke, U.S. interest rates futures implied traders had all but priced out any chance the Fed will raise rates at its policy meeting next week.
Against the yen, the dollar reversed its earlier losses and rose 0.2 percent to 107.81 yen, pulling away from the previous session’s low of 106.35, its weakest in a month. It remained well shy of levels above 109 yen, where it stood as recently as Friday.
Earlier on Tuesday, Japanese Finance Minister Taro Aso told reporters that he would refrain from commenting on Japan’s possible response in the currency market if the yen were to rise further.
Aso declined to comment on U.S. Treasury Secretary Jack Lew’s remark over the weekend that described recent currency market moves as “orderly” in a sign of caution towards currency intervention.
The euro edged up 0.1 percent to $1.1360, moving back towards the previous session’s nearly one-month high of $1.1393.
Recently volatile sterling marked a solid rebound after plunging more than 1 percent to three-week lows in the previous session, following several polls ahead of the June 23 referendum favoured the chance of British voters opting to leave the European Union.
But two polls in Tuesday’s newspapers showed Britons narrowly favour remaining in the EU, in contrast to the surveys released the previous day.
The pound added 0.7 percent to $1.4524 after touching a one-week high of $1.4664. It plumbed a low of $1.4352 on Monday, its deepest nadir since May 16.
The Australian dollar rose 0.6 percent to $0.7413 to one-month highs after the Reserve Bank of Australia held policy steady as expected, and said its decision was consistent with sustainable growth.
Source: Reuters
