Dollar falls broadly on Yellen's dovish comments
The greenback fell against majority of its peers on Tuesday after Fed Chair Janet Yellen made no hints of a possible rate hike in the near future.
Fed's Yellen said 'Fed policy-setting committee believes it's unlikely economic conditions will warrant a rate hike for at least the next couple of committee meetings; if economic conditions continue to improve, committee will consider rate hike on meeting-by-meeting basis, preceded by a change in forward guidance; change in forward guidance should not be read as indicating fed will raise rates in a couple of meetings; don't want to set down any single trigger for rate hikes; we will consider range of evidence on inflation outlook before hiking; if we see continued improvement in wages wud add to my confidence on inflation outlook; don't see any evidence of inflation heading abv 2%; getting closer to goal of maximum employment; risk of raising rates too soon wud be undermining recovery that just taking hold.'
Versus the Japanese yen, the greenback traded with a firm bias in Asia and continued to ratchet higher in Europe. Price eventually hit a session high at 119.84 in New York morning, however, the pair met heavy selling interest after comments from Yellen and tumbled to 118.76 in New York afternoon.
The single currency remained under pressure in Asia and weakened to 1.1297 in European morning before staging a recovery. Price fell briefly to session low at 1.1289 in New York morning before rising to session high at 1.1358 on dollar's weakness after comments from Yellen, however, the pair retreated to 1.1302 in New York afternoon before stabilizing.
The British pound also remained under pressure in Asia and weakened to 1.1530 in Asia before rebounding to 1.5466 at European open. However, renewed selling there pressured the pair lower and price fell briefly to 1.5402 in New York morning before rallying to 1.5473 on dollar's weakness.
In other news, Eurogroup's Dijsselbloem said 'Greek plan serious enough for negotiations on programme to be completed in 4 mths; Greek gov't is perhaps too optimistic about the speed with which they can boost tax income.'
On the data front, Germany GDP QQ n YY came in as expected at 0.7% n 1.6% respectively. EU inflation mm n yy came in as expected at -0.6% n -1.6% respectively.
Data to be released on Wednesday:
Australia Wage price, China manufacturing PMI, Italy trade balance and U.S. new home sales and second of the 2-day Fed Chair Yellen's testimony before the Congress.
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