US Dollar Holds Ground as Yellen Pledges to Maintain Bond Tapering Program
The US dollar held steady against a basket of its major peers amid signs the Federal Reserve will continue tapering bond purchases at a measured pace.
In her first public address as Chairman of the Federal Reserve, Janet Yellen told the House Financial Services Committee the central bank will continue to support her predecessor’s tapering initiative, although there was no “pre-set course” for eliminating record stimulus. Yellen said financial market turmoil is unlikely to threaten the outlook for the US, although labour market recovery is “far from complete.” This means stimulus reduction will probably occur in “measured steps.” Since December the Fed has pared back monthly asset purchases by $20 billion.
The US dollar index was relatively unchanged at 80.62. A slow data wire has kept the greenback subdued since Monday, as the forex market looks to determine the Federal Reserve’s next course of action. Below is a run-down of the major US dollar peers as of 19:00 GMT.
USD/CAD: The North American pair fell to a session low of 1.1011. The pair later consolidated at 1.1023, a loss of 32 pips. With the Canadian economy experiencing a modest rebound this winter, forex participants are seeing greater upside for the loonie. The USDCAD has declined more than three-quarters of a percent since the beginning of the month.
USD/JPY: The USDJPY rebounded strongly, as Japan paused to observe National Foundation Day. The pair advanced nearly 0.4 percent to 102.63. Japanese data failed to impress on Monday, as consumer confidence declined and the account deficit grew, official government reports said.
GBP/USD: The British pound edged higher versus the dollar, as forex traders turned their attention to the Bank of England, which is expected to release the Quarterly Inflation Report Wednesday. The GBPUSD soared to a session high of 1.6487 before consolidating at 1.6440, a gain of 36 pips.
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