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US Dollar Steadies Above Two-Week Lows

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US Dollar Steadies Above Two-Week Lows

The US dollar index was higher Wednesday, as the forex market continued to digest latest testimony from Federal Reserve Chairman Janet Yellen.

Although acknowledging that labour market recovery was far from complete, Yellen told the House yesterday the central bank remained committed to winding down its record stimulus program. The tapering process, which was initiated in December by former Chairman Ben Bernanke, will occur in “measured steps,” Yellen emphasized. Since November 2008 the Fed has eased around $4 trillion into the financial markets.

The US dollar rose moderately following the testimony, a trend that continued into Wednesday. As of 18:45 GMT, the dollar index was trading at 80.71, a narrow gain of 0.1 percent. The dollar’s performance, however, varied significantly across the board.

Weak industrial output data weakened Europe’s common currency. The EURUSD currency pair fell to a session low of 1.3562 before rebounding to 1.3590. As of 18:45 GMT, the pair was trading on a loss of 42 pips.

The British pound soared to two-week highs versus the dollar after the Bank of England hinted at a rate hike as early as 2015. The GBPUSD pair soared 135 pips to 1.6584, a two-week high.

In North America, the USDCAD weakened for the third time in four days, as encouraging trade figures from China boosted commodity prices. The USDCAD dropped below the key 1.10 level, hitting a session low of 1.0974.

The dollar was weaker versus the yen, declining 0.1 percent to 102.58, as Japanese investors made their way back to the trade table after National Foundation Day. Machine tool orders, a gauge of capital spending, rose for the eighth consecutive month, the Japan Machine Tool Builders’ Association reported today.

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