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FOREX-Dollar mostly steady before Yellen, up against yen
July 14, 2014 / 7:02 PM / 3 years ago

FOREX-Dollar mostly steady before Yellen, up against yen

* Dollar index trades tightly in low turnover
    * Treasury yields up
    * Fed's Yellen to testify at Congress on Tuesday, Wednesday

 (Adds late prices, quotes)
    By Michael Connor
    NEW YORK, July 14 (Reuters) - The dollar inched up against
the Japanese yen on Monday but was little changed against other
major currencies as investors awaited congressional testimony by
Federal Reserve Chair Janet Yellen on U.S. monetary policy.
    The dollar was up 0.2 percent against the yen at 101.58
.
    "There's a little backing up of U.S. yields (along with) the
rise in the stock market are helping give the dollar a little
bit of a firmer tone against the yen," said Marc Chandler,
global head of market strategy at Brown Brothers Harriman & Co
in New York.
    The euro also rose 0.25 percent against the yen, to 138.26
yen, recovering from last week's five-month low of
137.50 yen.
    The euro, which has been trading steadily against the dollar
at around $1.36, was nearly unchanged at $1.3611 after European
Central Bank President Mario Draghi cautioned lawmakers that a
strong euro could drag on a euro zone economic recovery.
 
    The U.S. dollar index of six currency trading pairs
was up slightly at 80.202 as U.S. Treasury yields perked up.
Benchmark 10-year Treasuries were down 8/32 in price
to yield 2.5468 percent.
    U.S. stocks were up smartly, with the Standard & Poor's 500
index of leading American corporations gaining 0.50
percent. 
    U.S. Treasury yields have mostly declined in recent weeks
and Fed Funds futures show investors are pushing back policy
tightening expectations following Fed minutes released last week
that suggested the central bank was in no rush to hike rates.
    Much will depend on what Yellen says during congressional
appearances set for Tuesday and Wednesday, particularly since
U.S. data in the second quarter has signalled a strengthening
economy.
    "The key is U.S. yields, and if they are not moving higher,
it's unlikely to translate into anything substantial for the
dollar," Commerzbank currency strategist Peter Kinsella said.
    Trading volumes were especially low, according to Douglas
Borthwick, managing director at Chapdelaine Foreign Exchange in
New York.
    "There's a lot of apathy," Borthwick said. "Volatility is
low and nothing - not Ukraine, Banco Espirito Santo - seems to
be enough for people to take big positions. Yellen will move the
market for five minutes, and that will be all."
    Currency traders are also looking for clues on macroeconomic
trends and will focus on the Empire State Manufacturing Survey
on Tuesday and Philadelphia Fed Survey on Thursday, Chandler
said.
   "The Empire State and the Philly Fed surveys will give us our
first read of the third quarter. That will be more important
than confirming a strong second quarter," he said.

 (Additional reporting by Jemima Kelly and Anirban Nag in
London; Editing by Peter Galloway and Meredith Mazzilli)

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