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FOREX-Dollar extends gains despite dovish Yellen comments
May 7, 2014 / 2:55 PM / 3 years ago

FOREX-Dollar extends gains despite dovish Yellen comments

(Updates prices, adds comments, changes dateline; previous LONDON)

* Dollar extends gains after Yellen testimony

* Dovish Yellen comments were expected

* Rouble gains on Putin comments

By Sam Forgione

NEW YORK, May 7 (Reuters) - The dollar rose broadly on Wednesday after traders removed short positions against the U.S. currency on the view that persistently dovish comments from the Federal Reserve have become less effective in weakening the dollar.

Fed Chair Janet Yellen, in testimony before the Joint Economic Committee of Congress, maintained her dovish stance and said a high degree of monetary accommodation was warranted given “considerable” slack in the U.S. labor market and low inflation.

“There is nothing new for dollar bears to feast on,” said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut.

The dollar had pared losses against the euro and risen broadly ahead of Yellen’s testimony after investors began removing short positions on the view that negative sentiment toward the U.S. currency had largely been priced into the market.

The dollar also extended its gains on a slight rise in Treasuries yields after the release of Yellen’s testimony at 10 a.m. (1400 GMT). Prices of 30-year Treasury bonds were last down 14/32 to yield 3.4 percent, from a yield of 3.38 percent late on Tuesday.

The euro was last down 0.03 percent against the dollar at 1.3923. The dollar was last up 0.01 percent against the Japanese yen at 101.69, and was up 0.09 percent against the Swiss franc at 0.8749 francs.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last up 0.08 percent at 79.170.

The dollar fell 1.17 percent against the Russian rouble to trade at 34.99 roubles on reduced geopolitical risk surrounding Russia and Ukraine.

The Russian currency extended its gains against the dollar after Russian President Vladimir Putin called on separatists in eastern Ukraine to postpone a referendum on independence for the mostly Russian-speaking region. Putin also said Moscow had withdrawn troops from the border with Ukraine. [ID: nL6N0NT52F]

“Political risk has faded significantly in Ukraine,” said Sebastien Galy, currency strategist at Societe Generale in New York.

Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Dan Grebler

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