The dollar dropped for the second day versus its peers after the Federal Reserve Chair Janet Yellen announced that the central bank won’t be locked into a timetable for increasing interest rates.
A key dollar index, the Bloomberg Dollar Index, which tracks its performance against 10 major counterparts, fell 0.1 percent to 1,164.46 at 10:03 a.m., New York time. The greenback remained slightly unchanged at 118.97 yen and plunged 0.1 percent to $1.1349 per euro.
Yellen told the Senate Banking Committee on Tuesday that the job market was strengthening though wage growth was weak.
“The market reads her testimony as slightly dovish,” Douglas Borthwick, a New York-based head of foreign exchange at Chapdelaine & Co., told Bloomberg News. “She has to walk a fine line. She wants the market to think they can raise in June, but at the same time it’s really dependent on data and how they’re coming out.”
Yellen said the Fed will be patient on raising interest rates, a remark analysts interpreted as meaning that the possibility of an interest rate increase is unlikely in the next couple of the central bank’s meeting. The central bank has retained the borrowing rate at nearly zero since December 2008 in order to boost economic growth.
The dollar has been backed this year by a booming economy. Economists in a Bloomberg survey estimate that the U.S. economy will grow 3.1 percent in 2015, exceeding the 2.14 percent growth forecasted for the Group of 10 countries. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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