The US dollar ended the week as the weakest major currency after Federal Reserve Chairwoman Janet Yellen made dovish comments, making speculators pare bets on an additional interest rate hike this year.
Yellen said in her testimony that the pace of monetary tightening will be gradual. Moreover, she mentioned that interest rates are not far from the neutral level. Market participants considered the comments to be very dovish and scaled back bets on more hikes this year. Considering that anticipation of additional monetary tightening was the major supportive force for the dollar, it is not a surprise to see the US currency vulnerable after losing support from the positive factor.
The Great Britain pound, on the other hand, continued to receive support from the outlook for monetary tightening by the Bank of England. The Bank of Canada actually hiked its interest rates and did not signal that it was just a one-off event as analysts had feared, and that bolstered the Canadian currency. Yet the strongest currency was the Australian dollar thanks to support from rising iron ore prices.
EUR/USD rallied from 1.1396 to 1.1468, reaching the highest weekly close since January 2015. GBP/USD jumped 1/7% from 1.2877 to 1.3097. USD/CAD sank 1.9% from 1.2880 to 1.2639. AUD/CAD surged as much as 3% from 0.7599 to 0.7827.
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