Markets

Forex - Dollar slips as investors await cues from Yellen

Investing.com -

Investing.com - The U.S. dollar slid lower against a basket of the other major currencies on Tuesday as markets awaited congressional testimony by Federal Reserve Chair Janet Yellen later in the trading day.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.2% to 100.8, off Monday's high of 101.11, the most since January 11.

Yellen will present the Fed's report on monetary policy and the economy in testimony to the U.S. Senate on Tuesday and the House on Wednesday, her first since the U.S. central bank hiked rates in December.

Investors will be watching her comments for clues on when the Fed could next raise interest rates.

According to Investing.com's Fed Rate Monitor Tool less than 15% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at just below 50%.

The Fed has forecast three rate hikes this year.

The dollar came under additional selling pressure after President Donald Trump's national security adviser Michael Flynn resigned late Monday amid allegations that he discussed the possibility of lifting sanctions with Russian officials before Trump's inauguration.

Demand for the dollar had been boosted in recent sessions after recent remarks from Trump indicated that his administration would soon reform tax policy.

The dollar weakened against the yen, with USD/JPY down 0.36% to 113.31.

Japanese Prime Minister Shinzo Abe said Tuesday that he agreed with Donald Trump at a weekend summit that currency issues should be left for finance leaders of each country to discuss.

The euro pushed higher, with EUR/USD rising 0.18% to 1.0617.

Markets were watching events in Greece as efforts continued to reach a deal on its next bailout payment before February 20th.

The single currency also remained under pressure amid fears over the possibility of a Brexit or Trump-style shock result in France's upcoming presidential election.

Meanwhile, data on Tuesday showed that Germany's economy did not perform as well as hoped in the fourth quarter, expanding by 0.4%.

Elsewhere, sterling fell after the latest UK inflation report showed that while the cost of living rose in January to the highest since June 2014 the increase disappointed expectations for an even sharper rise.

GBP/USD touched lows of 1.2445, down from around 1.2491 ahead of the data and was last at 1.2463, off 0.49% for the day.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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