After Federal Reserve Chair Janet Yellen said it was appropriate for the Fed to proceed “cautiously” in hiking interest rates, dollar hit its lowest level against the euro in over a week and fell against other major currencies on Tuesday.
Yellen, in her first remarks since a press conference after the Fed left rates steady at its most recent meeting earlier this month, said she still expected headwinds from weak growth abroad, low oil prices and uncertainty over China would abate and allow the recovery to continue.
Yellen’s comments, coming after recent hawkish remarks from Fed officials, hurt the dollar by pushing out expectations for the central bank’s next interest rate hike. U.S. Fed funds futures implied traders saw a 43 per cent chance of the central bank hiking rates in July, down from 51 per cent on Monday.
In reference to Yellen’s speech at the Economic Club of New York, co-head of foreign exchange at TJM Brokerage in Chicago, Richard Scalone said, “It (Other OTC: ITGL – news) was definitely dovish”.
“This is another push in the direction of fewer interest rate increases.”
The dollar index, which measures the greenback against a basket of six major currencies, hit a one-week low of 95.344.
On Wall Street, the benchmark S&P 500 stock index was last up 0.49 per cent.
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