Dollar wallows near four-week lows as Yellen sounds cautious note | Reuters - Firstpost
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Dollar wallows near four-week lows as Yellen sounds cautious note | Reuters

  Updated: Jun 7, 2016 07:00 IST

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TOKYO The dollar wallowed close to four-week lows against a basket of currencies on Tuesday, after Federal Reserve Chair Janet Yellen's remarks failed to toss a lifebuoy to the recently foundering greenback.

The dollar index, which tracks the U.S. currency against a basket of six major rivals, nudged up 0.1 percent to 93.959 .DXY, but it remained within sight of its overnight low of 93.745, its weakest level since May 11.

While Yellen remained upbeat about the overall U.S. economic outlook and said the Fed would hike interest rate hikes, she gave no fresh hints about timing, and called last month's U.S. jobs data "disappointing."

The dollar has been under pressure since the U.S. nonfarm payrolls report on Friday showed the slowest job growth in more than five years in May, quashing expectations for a near-term U.S. interest rate hike.

Even before Yellen spoke, U.S. interest rates futures implied traders had all but priced out any chance the Fed will raise rates at its policy meeting next week.

"The dollar only experienced modest losses following Yellen's speech but her cautiousness along with the drop in the market's expectations for a July rate hike according to the Fed fund futures points to further losses for the greenback," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note to clients.

Against the yen, the dollar slipped 0.3 percent to 107.31 yen JPY=, though it remained above the previous session's low of 106.35 earlier in the session, its weakest in a month.

The euro edged up 0.1 percent to $1.1361 EUR=, moving back towards the previous session's nearly one-month high of $1.1393.

Sterling stabilized after plunging more than 1 percent to three-week lows in the previous session, after several polls ahead of the June 23 "Brexit" referendum favored the chance of British voters opting to leave the EU.

Sterling added 0.2 percent to $1.4462 GBP=D4 after plumbing a low of $1.4352 on Monday, its deepest nadir since May 16.

The Australian dollar edged up 0.1 percent to $0.7372 ahead of the Reserve Bank of Australia's monthly policy decision later in the session.

The central bank is widely expected to hold rates at a record low of 1.75 percent following its cut in May, according to a Reuters poll, with 49 of 52 economists surveyed seeing the RBA standing pat.

(Reporting by Lisa Twaronite; Editing by Eric Meijer)

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