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Forex - Euro rallies to 1-1/2 month highs against weaker dollar

Investing.com -

Investing.com - The euro rallied to one-and-a-half month highs against the broadly weaker dollar on Wednesday, a day after Federal Reserve Chair Janet Yellen reiterated the need to take a cautious approach to tightening monetary policy.

EUR/USD hit highs of 1.1360, the highest level since February 11 and was last at 1.1351, up 0.52% for the day.

Investors pushed back expectations for a near-term rate hike by the Fed after Yellen said global risks to the U.S. economy, including low oil prices and uncertainty over China underlined the need for a cautious approach to raising U.S. interest rates.

The comments contrasted with recent remarks by some Fed officials who indicated that the bank could act as soon as next month to raise interest rates.

On Wednesday, Chicago Fed President Charles Evans said there is a high hurdle to raising interest rates in April, given low inflation.

He added that the U.S. central bank could move in June if the labor market continues to improve and reiterated that he still expects two rate hikes this year.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.6% at 94.6, the lowest level since October 16.

The index ended the previous session down 0.85%, the largest one day decline in almost two weeks.

The dollar remained broadly weaker despite data showing that the U.S. private sector added more jobs than expected last month.

Payroll processing firm ADP said nonfarm payrolls rose by 200,000 last month, compared to expectations for an increase of 194,000.

The economy created 205,000 jobs in February, whose figure was downwardly revised from a previously reported increase of 214,000.

Markets use the ADP data as a guide for the government nonfarm payrolls report, which will be released Friday

Economists expect Friday's report to show that the U.S. economy created 205,000 jobs last month, after jobs growth of 242,000 in February.

The greenback pared back losses against the yen, with USD/JPY last at 112.47, off lows of 112.02.

But the greenback remained weaker against the other major currencies, with USD/CHF falling 0.69% to 0.9599 and GBP/USD rising 0.41% to 1.4443.

The commodity linked currencies rallied against the greenback, with the New Zealand dollar scaling five-month highs of 0.6955.

AUD/USD jumped 0.94% to 0.7697 and USD/CAD dropped 1.16% to 1.2921 as oil prices jumped after a smaller than expected build in crude oil inventories.

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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.


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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