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Dollar drifts lower as investors look ahead to Yellen testimony

7/11/2017, 10:23:06 AMMarket Analysis
Dollar drifts lower as investors look ahead to Yellen testimony

The dollar traded below break even on Monday, as market participants awaited a raft of economic data due later in the week, expected to provide fresh direction on the greenback while Friday’s solid jobs report limited downside momentum.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.02% to 95.76.

In what was quiet day for top-tier economic data, the dollar drifted lower but losses were capped as investors continue to cheer Friday’s bullish jobs report suggesting that U.S. economic growth remained robust.

Investors are expected to closely monitor events later in the week, which includes testimony from Fed chair Janet Yellen on the state of the U.S. economy and the Fed’s monetary policy outlook.

Yellen is scheduled to testify on the economy before the Senate Banking Committee at 10:00AM ET (14:00GMT) Wednesday. On Thursday, she will appear in front the House Financial Services Committee also at 10:00AM ET.

The yen failed to capitalise on the move lower in the greenback, as USD/JPY rose to a two-month high of $114.30 in the wake of the Bank of Japan’s reluctance to taper its accommodative monetary measures.

"Dovish expectations regarding the BoJ's policy, combined with the U.S. yields are supportive of a further yen depreciation against the U.S. dollar," said Ipek Ozkardeskaya, a senior market analyst at London Capital Group.

GBP/USD fell to $1.2888, down 0.03%, ahead of speeches by Bank of England MPC members Haldane and Broadbent, which may offer clues about the central bank’s future monetary policy decisions.

EUR/USD bounced off session lows to $1.1406, up 0.06%, while EUR/GBP added 0.07% to $0.8850.

USD/CAD rose by 0.03% to C$1.2877, as a rise in oil prices failed to underpin a move higher in the oil-linked Canadian dollar.