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Dollar flat as Yellen testimony dents future rate hike expectations

7/13/2017, 10:30:15 AMBasics of Trading
Dollar flat as Yellen testimony dents future rate hike expectations

The dollar eased form highs against a basket of global currencies on Wednesday, as Janet Yellen’s prepared remarks to congress pointed to a “gradual” tightening in interest rates, revealing that the Federal Reserve remained wary of continually raising rates amid a slowdown in inflation.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.01% to 95.50.

Despite Yellen’s testimony signaling a “gradual” tightening in interest rates would be appropriate, it also quashed the idea of the Federal Reserve adopting an aggressive rate hike path, as the Fed believes it is not that far from the neutral rate.

Also weighing on the greenback, was a rise in the Canadian dollar, after the Bank of Canada raised rates from 0.5% to 0.75% for first time in seven years.

USD/CAD fell to C$1.2722, down 1.49%.

Meanwhile the pound pared recent losses to trade $1.2897, up 0.40%, on the back of better than expected labour market data, showing a dip in unemployment to a 42-year low.

The pound, earlier, fell to session lows after Bank of England Deputy Governor Ben Broadbent said in an interview Wednesday that he believed it is too soon to raise interest rates.

EUR/USD dipped by 0.44% to $1.1415 while EUR/GBP fell 0.82% to £0.8853.

USD/JPY fell to Y113.29, down 0.57%.