Janet Yellen, the head of the US Federal Reserve Bank, disappointed dollar bulls yesterday when she testified in front of the U.S. Senate and maintained a decidedly dovish tone, which suggested to FX investors that the Fed wasn’t ready to begin a true tightening cycle involving any potential rate hike. The Fed chief maintained that the Fed’s use of the word “patient” in its policy statements should not be misconstrued by investors or taken out of context, and even the Fed’s withdrawal of the word should infer an imminent rate hike.
As reported at 8:24 am (GMT) in London, the US Dollar Index fell to 94.292 .DXY, a loss of 0.2%, with the greenback pulling back broadly against its major peers. The USD/JPY dipped 0.2% to trade at 118.73 Yen, the EUR/USD was 0.3% higher at $1.1375 and the GBP/USD was ahead at $1.5502, a similar gain of 0.3%.
Investors Already Look ahead to NFP
Yellen insisted that the Fed’s bias and policy decision would be evaluated on a regular basis and would depend to a great extent on data. To that end, many believe that the Fed will continue to carefully watch the labor report which is due out next week, and if it as robust as it has been in months past, then the Dollar is likely to get some major support and the Fed could possibly be swayed and put a rate hike back on track.