Dollar falls as traders weigh next U.S. rate hike
By Richard Leong
NEW YORK (Reuters) - The dollar weakened against a basket of major currencies on Thursday, posting its steepest one-day drop in over two weeks, due to lower U.S. bond yields and uncertainty over the timing of the Federal Reserve's next interest rate increase.
The greenback posted losses for a second day, retreating further from a one-month high set during a winning streak where it touched a five-week peak versus the euro and a 2-1/2 week high against the Japanese yen.
Traders have scaled back bets on a looming U.S. rate hike as they concluded Fed Chair Janet Yellen did not deliver enough conviction at her economic testimony before Congress on Wednesday on whether the Fed's next rate increase would 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 Chicago.
Investors now await for details from U.S. President Donald Trump on possible proposals on tax cuts, looser regulations and infrastructure spending, traders said.
"With the spotlight on Trump’s policy agenda, the Fed has taken a backseat as their response has become more sensitive to the president’s fiscal initiatives," said Peter Ng, senior currency trader at Silicon Valley Bank in Santa Clara, California.
The dollar index .DXY was last down 0.7 percent at 100.49, below a one-month peak of 101.76 reached on Wednesday. Continued...