Dollar pares post-NFP gain and shows muted reactin to Yellen's comments: Apr 11, 2017

Market Review - 10/04/2017  22:17GMT  

Dollar pares post-NFP gain and shows muted reactin to Yellen's comments

The greenback turned lower against majority of its peers on Monday as investors remained cautious ahead of a speech from Federal Reserve Chair Janet Yellen later in the day. Later, Yellen made a neutral speech and said the Fed's plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat. Dollar showed relatively muted reaction after her comments. 

Versus the Japanese yen, although dollar rose from Australian low at 111.01 to session high at 111.58 in Asian morning, price pared its gains and dropped to 111.18 in European morning, then lower to an intra-day low at 110.81 in New York on greenback's broad-based weakness. Price later moved narrowly as market awaited Yellen's speech. 

The single currency edged lower to 1.0571 in Asian morning before staging a rebound to 1.0594 ahead of European open, however, euro met renewed selling there and retreated to 1.0571 again ahead of New York open. Failure to penetrate said support triggered short-covering and the pair staged a recovery to 1.0607 in New York morning. The euro later retreated to 1.0587 ahead of Yellen speech. 

Despite edging down to 1.2366 in Australia, the British pound gained to 1.2406 in European, then higher to 1.2429 in New York morning due partly to cross-buying of sterling especially vs euro. Although price retreated in tandem with eur/usd to 1.2406, price later edged higher ahead of New York close. 

Fed Chair Yellen said the Federal Reserve's plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat, Fed Chair Janet Yellen said on Monday. 

"I think we have a healthy economy now," Yellen said at an event at the University of Michigan's Ford School of Public Policy in Ann Arbor. 

Unemployment, at 4.5 percent, is now a little bit below the jobless rate that most Fed officials think signals full employment, and inflation is "reasonably close" to the Fed's 2-percent goal, she said. With the economy expected to continue to grow at a moderate pace, she said, the Fed is now shifting its focus. 

In other news, ECB's Constancio said 'recovery of headline inflation rate was disappointing so far; more effort is needed to solve the problem of non performing loans; we consider our current monetary policy stance as appropriate; have no timeframe for change in monetary policy, change will depend on data.' 

On the data front, the Frankfurt-based Sentix research group's euro zone index rose to 23.9 points, its highest level since August 2007. That exceeded the consensus forecast of 21.0 in a Reuters poll of analysts. 

Data to be released on Tuesday: 

Australia business confidence, business conditions, UK CPI, core CPI, RPI, core RPI, PPI input, PPI output, Germany ZEW economic sentiment, current conditions, EU economic sentiment, industrial production and U.S. redbook.