Dollar steady as traders await views of Fed's Yellen
NEW YORK (Reuters) - The dollar traded tightly and held steady against major currencies on Monday as traders awaited the latest economic and policy views from the new head of the Federal Reserve.
Janet Yellen, who last week took over from Ben Bernanke at the helm of the Fed, is viewed as an architect of the U.S. central bank's current ultra-loose policy and makes her first appearances as the Fed chair before Congress on Tuesday and Thursday.
"We won't get much until Miss Yellen has her say," said Joseph Trevisani, chief market strategist at WorldWideMarkets Online Trading in Woodcliff Lake, New Jersey. "She has the potential to rile things up. I don't think she will but she could."
The dollar index last traded down 0.02 percent at 80.671 after touching its lowest in about one and a half weeks.
The greenback was mildly weaker versus the yen at 102.22 yen, down 0.15 percent on the day after reaching a low for the day of 101.99. This followed Friday's choppy session when the dollar managed a 0.2 percent gain against the safe-haven Japanese currency.
The euro traded tightly against the dollar and was up 0.06 percent at $1.3643, and was off 0.115 percent against the yen at 139.45 yen.
While analysts anticipate U.S. lawmakers will question Yellen, the first female head of the Fed, on monetary policy, bank regulations and other potentially market-moving topics, they reckon she will stick to replies that would not alter expectations the Fed will hold short-term rates near zero for an extended period to support the economy.
Nor do analysts foresee she would say anything that would upset expectations the Fed will back away from tapering its massive bond-purchase stimulus even after news U.S. employers added only 113,000 workers last month, far fewer than the 185,000 increase forecast by analysts.
The Fed has reduced its third round of quantitative easing twice, to $65 billion in February. Wall Street widely expects policy-makers to taper by another $10 billion a month at their March meeting.
"The market is not indicating it's expecting any policy changes. I'm not sure we're going to get anything new," said Bob Lynch, head of G10 FX trading at HSBC Bank USA in New York.
Latin American currencies weakened on Monday as traders corrected an overdone rally but volumes were light ahead of Yellen's testimony as the Federal Reserve's new chair.
Brazil's real ended a four-day advance against the dollar, losing 1.13 percent and erasing the previous two sessions' gains. The Chilean and Mexican pesos also weakened modestly.
- Tweet this
- Share this
- Digg this