U.S. Dollar Holds Losses Before Yellen Speaks

The dollar held losses against most of its 16 major peers from yesterday on prospects Federal Reserve Chair Janet Yellen will underscore expectations that the central bank will maintain stimulatory policies.

The greenback touched the lowest in almost a week versus the yen, after 10-year Treasury yields fell to the least in six months yesterday, dimming the allure of U.S. assets. Yellen told Congress last week the economy needs support. A report showed Japan’s gross domestic product expanded at the fastest pace in 2 1/2 years, damping bets for additional Bank of Japan easing. The euro remained higher versus the pound before figures that may indicate growth accelerated in the 18-nation region.

“The dollar is headed lower, and I think the currencies that are going to do best against the dollar are those currencies that offer some carry,” said Todd Elmer, a Singapore-based currency strategist at Citigroup Inc., referring to a strategy of borrowing in low-interest currencies to invest in higher yielding ones. “The stance from the Fed has been very relaxed.”

Bloomberg

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