February 11, 2014 / 8:06 PM / 4 years ago

FOREX-Dollar keeps modest gains after Yellen testimony

* Yellen testimony delivers no market surprises
    * Dollar little changed after dip to near two-week low
    * Australia dollar jumps as emerging currencies ease

    By Michael Connor
    NEW YORK, Feb 11 (Reuters) - The dollar came off nearly two-week lows and
held gains against the yen Tuesday after new Federal Reserve Chair Janet Yellen
signaled there would no immediate deviation from the U.S. central bank's winding
up of its massive bond purchases.
    The dollar index composed of six currencies increased from lows not
seen since Jan. 29 after Yellen's testimony was published, dropped a bit later
during her congressional appearance, and finished flat for the day at 80.642.
    "We haven't seen major moves," said currency strategist Camilla Sutton at
Scotia Capital in Toronto.
    The dollar jumped against the Japanese yen to as high as 102.71 yen
from 102.33 on Monday and kept most of its gains to close at 102.625, or up 0.3
percent for the day.
    The U.S. currency trimmed losses against the euro, initially moving
to $1.3662 from $1.3678 before Yellen's testimony and ended in New York at
    In her first congressional appearance as Ben Bernanke's successor as Fed
chair, Yellen said the U.S. labor market recovery was "far from complete," and
said the Fed expects to continue trimming policy stimulus. She emphasized
continuity, with currency strategists saying there had been no surprises.
    "The clear message here is that the bar to doing less tapering is very
high," said Shaun Osborne, chief foreign exchange strategist at TD Securities in
    Yellen's reaffirmation of the Fed's stimulus policies carried over to
emerging markets, where currencies declined slightly while Kazakhstan's tenge
lost a fifth of its value following a devaluation by the ex-Soviet country's
central bank. 
    The Australian dollar rose to its highest point in almost a month, helped by
an upbeat business survey and buying from hedge funds, which have been betting
against the Aussie for months and are now taking profits, traders said.
    The Aussie dollar last traded up 1 percent at US$0.0939.
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