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Wall Street Journal - Dollar Steady After Comments From Fed's Yellen
Wednesday, 16 April 2014
Fed Chief Yellen Vows Vigilance on Low Inflation
The dollar held steady against major currencies Wednesday after Federal Reserve Chairwoman Janet Yellen indicated in a speech that the central bank has no plans to raise interest rates ahead of schedule.
The greenback maintained its 0.3% gain against the yen, at ¥102.26, as well as its 0.1% loss against the euro, at $1.3830.
Investors have heard Ms. Yellen reiterate recently a monetary-policy position that includes keeping U.S. interest rates low. They expected no significant deviation from this stance in Wednesday's comments, said Ken Wills, senior corporate dealer at USForex. Ms. Yellen spoke at the Economic Club of New York.
"There was nothing surprising from her comments to cause the dollar to move drastically," Mr. Wills said. "The dollar will continue to trade within current ranges and is likely to have more of a reaction around fundamental data as they come in, the key being employment."
Investors tend to buy dollars and dollar-denominated assets when interest rates climb, as those assets would gain in value against the currencies of countries where interest rates fall or remain low. Most in the currency market don't expect U.S. interest rates to rise until around the middle of 2015.
Ms. Yellen continued to present inflation and unemployment as the primary factors the Fed would use to assess of the health of the U.S. economy.
The risk of persistently low consumer prices outweighed that of high inflation, she said. Fed officials also see room for unemployment to fall to between 5.2% and 5.6% by the end of 2016, Ms. Yellen said. The unemployment rate stands at 6.7%.
From: The Wall Street Journal
