Article by ForexTime
The US dollar weakened after Federal Reserve Chair Janet Yellen gave a dovish speech at the Economic Club of New York on Tuesday.
Yellen reiterated the need for the US central bank to “proceed cautiously” in hiking interest rates as she referred to the unfavourable market conditions, weaker than expected overseas growth and an uncertain inflation outlook. She stressed the need for a gradual tightening of policy due to risks from China and the oil markets.
The Fed Chair’s surprisingly dovish take on the current policy stance and near-term outlook caused investors to sell the dollar. US Treasuries rallied as investors shifted their bets of when the US central bank would next lift rates.
Odds that the Fed will next increase benchmark rates in September slipped to 52 per cent from 59 per cent a day earlier, while the Federal Funds curve implied that rates would not top 1 per cent until mid-2018.
US stocks bounced off lows earlier in the trading day, with the S&P 500 climbing 0.4 per cent to 2,045.65. The rise pushed the benchmark index back into positive territory for the year, lifting the month-long rally to nearly 6 per cent.
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Article by ForexTime
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