|
 The drop in the dollar mirrored a pullback in U.S. front-end yields
from recent highs, as Yellen's testimony to Congress disappointed
investors who had positioned themselves for a clearer signal on when
rates would rise.
Yellen declined to provide much insight into when the word "patient"
might be dropped from the Fed's monetary policy statement. Instead,
she emphasized that dropping the word would not necessarily mean
rate hikes were imminent.
Whether to raise rates will depend on economic data and will be
decided on a meeting-to-meeting basis, she said.
"Some investors were positioned for more hawkish comments and they
were disappointed," said Yujiro Goto, a currency strategist at
Nomura. "We still hold a dollar bullish bias and if the U.S. jobs
data surprises to the upside next week, we could see a return of
dollar strength."
The dollar index <.DXY> was down 0.25 percent at 94.245, with the
greenback shedding ground against almost every major currency. It
fell 0.2 percent against the yen to 118.73 yen, while sterling rose
to a eight-week high of $1.5538. Against the euro, it was up 0.1
percent at $1.1355.
The dollar's drop was seen as temporary. The Fed still appears to be
on track to raise rates later this year, although probably not in
June as a few large banks had forecast.
In contrast, the European Central Bank is beginning a 60
billion-euros-a-month bond buying programme next month. The Bank of
Japan is already deep into a similar quantitative easing programme.
That makes the dollar a buy on dips, traders said.
[to top of second column] |
"We attribute the FX market's reaction largely to positioning going
into the (Yellen) event," said Susanne Galler, a currency analyst at
Jefferies.
"In a nutshell, if the `patient' phrase remains in the March
statement, forget about a hike in June. If it is dropped, anything
goes as of June. But whether a hike will take place in June or as
late as December will simply be data dependent."
The Australian dollar rose 0.7 percent to $0.7885, aided by the
greenback's weakness and a survey showing that activity in China's
mammoth factory sector edged up to a four-month high in February.
The Aussie is seen as a liquid proxy of Chinese growth prospects
because of Australia's trade exposure to China.
(Additional reporting by Masayuki Kitano; Editing by Larry King)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
