Forexpros – The dollar dipped against the world’s major currencies on Thursday after a key Federal Reserve official said the U.S. economy could not rule out the need for monetary easing measures to ensure price stability and jobs growth.
Falling yields in Spanish government bond auctions also weakened the dollar.
The euro rose against the U.S. currency in Asian trading Thursday, with EUR/USD rising 0.02% and trading at 1.3110.
The U.S. economy is growing although at a sluggish pace, and talk the Fed will roll out monetary easing measures like bond purchases from banks has come and gone in recent weeks with no action or serious hints from the Fed.
Prior to Asia’s opening on Thursday, the Federal Reserve released its Beige Book, revealing that the economy was growing at a modest to moderate pace in March although gasoline prices were lagging on recovery, which brought out some bullish trades among dollar investors.
However, Federal Reserve Vice Chair Janet Yellen said that the U.S. central bank cannot rule out weakening the dollar via monetary stimulus in exchange for increased investment and hiring should the economy take a turn for the worse.
“I consider a highly accommodative policy stance to be appropriate in present circumstances. But considerable uncertainty surrounds the outlook, and I remain prepared to adjust my policy views in response to incoming information,” Yellen said in prepared remarks.
“In particular, further easing actions could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates,” referring to the Federal Open Market Committee (FOMC), the body that votes on monetary policy.
The dollar also weakened against the euro on news yields on Spanish government bonds were falling on hopes the European Central Bank would consider buying the country’s bonds in effort to calm fears from investors worried about Madrid’s ability to finance itself.
The greenback, meanwhile, was down against the pound, with GBP/USD up 0.06% and trading at 1.5916.
The U.S. currency was up against the yen, with USD/JPY trading up 0.20% at 81.02, and flat against the Swiss franc, with USD/CHF trading at 0.9174.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.04% at 1.0034, AUD/USD up 0.49% at 1.0349 and NZD/USD up 0.12% at 0.8188.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.02% at 79.94.
Later Thursday, U.S. initial jobless claims and trade balance figures will be released.
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