* Yellen stresses need for interest rates to stay low
* Upbeat U.S. regional Fed data pare dollar's losses
* Sterling reaches near 4-1/2-year high vs greenback
* Trading slows ahead of Easter holidays
(Updates market action, adds quote, changes byline, dateline,
By Richard Leong
NEW YORK, April 17 The U.S. dollar slipped
against a basket of currencies on Thursday after Federal Reserve
Chair Janet Yellen said low interest rates are needed to support
the U.S. economy even though such a policy stand hurts its
Dollar weakness helped propel sterling to its highest
against the U.S. currency since late 2009 as investors continued
to price in expectations for a Bank of England rate hike in the
first quarter of 2015 after strong jobs and wages data on
The greenback also lost ground against the euro and the yen
on dwindling trading volume in advance of the Easter holiday. It
trimmed earlier losses against those currencies after a
stronger-than-expected reading from the Philadelphia Federal
Reserve on business activity in the U.S. Mid-Atlantic region.
Sterling's trade-weighted index hit a 5-1/2-year high
in the European session, up 1.8 percent on the year before
easing in early U.S. trading.
In her second public speech as the head of the U.S. central
bank on Wednesday, Yellen stressed the need for accommodative
policy, citing the current anemic pace of price growth as more
of an economic threat than the risk of rising long-term
Her dovish remarks overshadowed data suggesting that the
U.S. economy was regaining momentum. Thursday's data showed
domestic jobless claims held near pre-recession levels. They
followed Wednesday's data that indicated U.S. factory output
rose solidly in March and the Fed's Beige Book report showed
economic activity picked up in recent weeks.
This latest evidence, however, was not robust enough to
override Yellen's rhetoric on low interest rates, analysts said.
"The data are not strong enough to push back the dovish
stand," said Sebastien Galy, currency strategist at Societe
Generale in New York.
The dollar index dipped 0.1 percent to 79.700 after
hitting a session low of 79.581. The greenback dipped 0.1
percent versus the euro at $1.3821 and was little changed
against the yen at 102.22 yen.
Sterling was up 0.1 percent at $1.6806, after
hitting its highest since late 2009 at $1.6842.
Meanwhile, the Russian rouble improved for a second day
against the dollar as violence intensified in East Ukraine even
though Ukrainian, Russian and Western diplomats sought to
resolve the crisis.
The rouble last traded up 0.9 percent versus the
greenback at 35.72 roubles.
Volumes are expected to fade in advance of the Easter
holiday. London, which has the biggest share of daily global
currency trading, will be shut on Friday and Monday, while U.S.
financial markets will be closed on Friday. Markets in Tokyo
will be open.
Nevertheless, according to data from Reuters Matching,
trading in dollar/yen was well above its one-month average.
Some investors apparently used comments by Bank of Japan
Governor Haruhiko Kuroda as an excuse to buy back yen, even
though his remarks contained nothing new, Ayako Sera, senior
market economist at Sumitomo Mitsui Trust Bank, said.
The central bank chief said the BoJ would adjust monetary
policy when needed but said nothing to indicate that more easing
steps would be forthcoming any time soon.
"There is potential for another leg lower in the correction
witnessed since the beginning of the year, in our view. We look
to sell rebounds towards the 102.50 yen area, with a move below
101.50 yen triggering a renewed bearish signal for dollar/yen,"
Morgan Stanley analysts said in a note.
The euro, though, edged 0.1 percent higher against the yen
to 141.42 yen and held firm against the dollar with
some of its gains linked to demand for an Italian bond from
overseas investors, traders said.
(Additional reporting by Anirban Nag in London and Lisa
Twaronite in Tokyo; Editing by James Dalgleish)