Wednesday, February 10, 2016

US Dollar Down Near 3-1/2-month as Yellen eyed for direction

US Dollar, forex, Yellen, economy

The dollar weakens near 3-1/2-month low against a basket of major currencies on Wednesday, as traders awaits the announcement of U.S. interest rate guidance from Federal Reserve Chair Janet Yellen. It was also affected by fears of a global economic slowdown amid the recent falls in oil prices and growing concerns about the health of European banks.

Experts said that because of those difficulties, the U.S. Federal Reserve will not raise interest rates in the near future. Traders are also looking to Fed Chair Janet Yellen's congressional testimony later in the day for clues on the outlook for policy.

Against a basket of currencies the dollar was flat at 96.056 .DXY, having touched 95.663 on Tuesday, its weakest since October.

The low represented a 4.8% decline from its 12-1/2-year peak touched in early December when the consensus was for the Fed to keep raising rates this year, stoking a global capital rush of funds to higher-yielding dollar assets.

The dollar's fall has been most notable against the yen, which had been depressed at low levels over a long period because of the Bank of Japan's aggressive monetary easing since 2013.

The dollar fell 0.7% to 114.37 yen , not far from its 15-month low of 114.205 yen hit on Tuesday.

A fall in Japan's benchmark Nikkei share average <.n225> to its lowest levels since October 2014 helped spur demand for the safe-haven yen, analysts said.

Such weakness in Japanese equities could dampen Japanese investors' risk appetite and weigh on the dollar versus the yen in coming months, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

The euro were steadfast at $1.1295, they've hit a 3-1/2 month high of $1.13385 on Tuesday.

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