The dollar hit a one-month low on Thursday, staying on the defensive after the head of the Federal Reserve disappointed some who had hoped for a clearer signal on when the central bank will lift interest rates. Instead, Fed Chair Janet Yellen on Wednesday emphasised that the rate decision was still up in the air and rested squarely on further improvement in the labour market, a longstanding concern.
In their projections, Fed officials also saw slightly lower rates at the end of 2016 and 2017 than forecast in March and more policymakers were now in favour of hiking rates only once or not all this year. Overall, the projections for interest rates and remarks by Yellen were interpreted as being slightly dovish, said Jesper Bargmann, head of trading for Nordea Bank in Singapore.
“It’s not a big reaction, but it’s been a little bit negative for the dollar,” Bargmann said. Against a basket of six major currencies, the dollar fell as far as 94.017 – its lowest level since May 18. It last stood at 94.109, down from Wednesday’s intraday high of 95.178.