US Dollar Weakens After Janet Yellen Testifies

The US dollar fell versus its major peers (though not against the extremely weak euro) after Federal Reserve Chairwoman Janet Yellen testified before the House Financial Services Committee today.

Yellen delivered a prepared testimony on the Semiannual Monetary Policy Report. While some analysts thought that her tone was neutral, most considered the testimony to be dovish. She mentioned an increase of interest rates, but only gradual:

The Committee continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices.

The comments somewhat damped expectations of another interest rate hike this year, but did not erase them completely. CME FedWatch shows less than 10% probability of a hike in September but still just above 50% chance in December.

EUR/USD dropped from 1.1466 to 1.1413 as of 20:43 GMT today, though its daily high of 1.1489 was the highest since May 2016. At the same time, GBP/USD rallied from 1.2842 to 1.2883. USD/JPY declined from 113.93 to 113.12.

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