U.S. Dollar Falls On Dovish Yellen Testimony
13 July 2017 - 1:57PM
RTTF2
The U.S. dollar slipped against its major counterparts in the
Asian session on Thursday, after the Fed Chair Janet Yellen
signaled gradual rate hikes over time as inflation remains too low
from the central bank's target.
Yellen's cautious note on inflation made investors lower their
expectations on the pace of policy normalization.
In her Congressional testimony, Yellen hinted at "gradual rate
hikes" in the next few years and backed the reduction of the size
of its $4.5 trillion balance sheet later this year.
Monetary policy was not on a "preset course," Yellen said,
adding that there are roughly equal odds that "the US economy's
performance will be somewhat stronger or somewhat less strong than
we currently project."
Although Yellen said that the inflation is expected to reach
their 2% target, she noted that the Fed officials are ready to
adjust policy in case of persistent inflation undershoot.
Yellen testifies before the Senate Banking Committee later in
the day.
The greenback showed mixed performance on Wednesday. It rose
against the euro and the franc, but fell against the yen and the
pound.
The greenback that closed Wednesday's trading at 1.1411 against
the euro and 0.9653 against the franc fell to 1.1456 and 0.9615,
respectively. The next possible support for the greenback is seen
around 1.16 versus the euro and 0.93 against the franc.
The greenback hit a 2-day low of 1.2925 versus the pound,
compared to 1.2884 hit late New York Wednesday. If the greenback
extends slide, 1.32 is likely seen as its next support level.
The greenback slipped to a 6-day low of 0.7305 against the kiwi,
off its early high of 0.7246. Continuation of the greenback's
downtrend may see it challenging support around the 0.75 area.
Reversing from an early high of 0.7675 against the aussie, the
greenback fell to 0.7715, which was its lowest level since March
21. The greenback is poised to challenge support around the 0.79
region.
The greenback declined to 112.86 against the yen, its lowest
since July 5. Further weakness may take the greenback to a support
around the 111.00 mark.
Looking ahead, Canada new housing price index for May, U.S. PPI
for June and U.S. weekly jobless claims for the week ended July 8
are slated for release In the New York session.
At 10:00 am ET, Federal Reserve Chair Janet Yellen testifies on
the Semiannual Monetary Policy Report before the Senate Banking
Committee, in Washington DC.
At 11:30 am ET, Federal Reserve Bank of Chicago President
Charles Evans is expected to speak about the economy and monetary
policy at the Annual Rocky Mountain Economic Summit in Idaho,
U.S.
At 1:00 pm ET, Federal Reserve Governor Lael Brainard is
scheduled to speak about monetary policy at the National Bureau of
Economic Research, in Massachusetts.
At 2:00 pm ET, U.S. Federal monthly budget statement is slated
to publish.
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