Dollar index rises as Yellen signals more rate hikes
By Richard Leong
NEW YORK (Reuters) - The dollar climbed on Tuesday to a three-week peak against a basket of major currencies as investors raised their outlook on a faster pace of U.S. interest rate increases following comments from Federal Reserve Chair Janet Yellen.
Yellen's remarks reinforced recent comments from other Fed policymakers who would like to see a faster pace of rate increases that is appropriate at this point of the economic expansion.
"She is laying the groundwork for three rate hikes this year," said Scott Clemons, chief investment strategist at Brown Brothers Harriman in New York.
U.S. interest rates futures FFZ7 implied traders saw about a 41 percent chance of at least three rate increases in 2017, up from a 33 percent chance on Monday, CME Group's FedWatch program showed.
"Waiting too long to remove accommodation would be unwise," Yellen said in prepared remarks before the U.S. Senate Banking Committee, the first of her two-day testimony before Congress.
Yellen was scheduled to appear before the House of Representatives Financial Services Committee at 10 a.m. (1500 GMT) on Wednesday.
In overnight trading, the dollar index .DXY slipped after U.S. President Donald Trump's national security adviser Michael Flynn quit in a controversy relating to Russia.
Flynn's resignation raised worries about the Trump administration's ability to implement its economic policies, including planned tax cuts, which have been seen as bullish for the dollar and stocks. Continued...