* Euro rebounds from 5-week lows versus dollar
* Dollar scales back from 2-1/2 week peak against yen
* Upbeat U.S. data briefly trims dollar index's drop
(Updates trading, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, Feb 16 The dollar weakened against a
basket of major currencies on Thursday, retreating further from
a one-month high, amid lower U.S. bond yields and uncertainty
over the timing of the Federal Reserve's next interest rate
The greenback was on track for a second day of losses
following a winning streak where it touched a five-week peak
versus the euro and a 2-1/2 week high against the yen.
Traders have scaled back bets on a looming U.S. rate hike as
they concluded Fed Chair Janet Yellen didn't deliver enough
conviction, at her economic testimony before Congress on
Wednesday, on whether the Fed's next rate increase will come at
its March 14-15 meeting.
However, she signaled more than two rate increases may be
possible this year as the economy approaches full employment and
inflation closes in on the Fed's 2 percent goal.
"The dollar rally that preceded Yellen's testimony wasn't
given more fuel so we are seeing that move fade," said Richard
Scalone, co-head of foreign exchange at TJM Brokerage in
The dollar index was last down 0.7 percent at 100.48,
below a one-month peak of 101.76 reached on Wednesday.
The greenback scaled back from a 2-1/2 week high of 114.95
yen on Wednesday against the yen, touching a low of
113.17 yen. It was last down 0.8 percent at 113.24 yen.
The euro gained 0.7 percent at $1.0672, recovering from a
five-week trough of $1.052 set on Wednesday.
Earlier Thursday, the greenback briefly pared its losses
against the euro and yen following encouraging data led by a
Philadelphia Fed measure on U.S. Mid-Atlantic business activity
which hit a 33-year high in February.
Reduced expectations about a rate increase in March,
together with declines on U.S. equity indexes, helped revive
investors' appetite for U.S. Treasuries, pushing benchmark
yields below 2.50 percent.
After Yellen raised the possibility of more than two rate
increases, other Fed officials, including Fed Vice Chair Stanley
Fischer and New York Fed President William Dudley, emphasized
the overall path of further rate rises would be a gradual one.
Interest rates futures implied traders saw a 22 percent
chance of a rate increase in March, down from 31 percent
on Wednesday, according to CME Group's FedWatch program.
Currency bid prices at 10:56AM (1556 GMT)
Description Last U.S. Close Pct Change
Euro/Dollar $1.0673 $1.0598 +0.71%
Dollar/Yen 113.2700 114.1500 -0.77%
Euro/Yen 120.90 120.98 -0.07%
Dollar/Swiss 0.9982 1.0051 -0.69%
Sterling/Dollar 1.2504 1.2458 +0.37%
Dollar/Canadian 1.3066 1.3077 -0.08%
Australian/Doll 0.7690 0.7708 -0.23%
Euro/Swiss 1.0655 1.0654 +0.01%
Euro/Sterling 0.8534 0.8502 +0.38%
NZ 0.7222 0.7221 +0.01%
Dollar/Norway 8.2988 8.3375 -0.46%
Euro/Norway 8.8603 8.8370 +0.26%
Dollar/Sweden 8.8627 8.9182 +0.04%
Euro/Sweden 9.4589 9.4548 +0.04%
(Additional reporting by Yumna Mohamed; Editing by Bernadette