Dollar Ticks Higher After Yellen Testimony

 
By James Ramage 
 

        The dollar edged higher against major currencies Wednesday after Federal Reserve Chairwoman Janet Yellen gave a mostly upbeat economic outlook, offering no surprises for investors.
        The U.S. currency rose 0.2% against the yen, to Ґ101.91, from lows of Ґ101.58 following the release of Ms. Yellen's testimony to Congress's Joint Economic Committee. The euro slipped 0.1% to $1.3913, as did the British pound, to $1.6956, which remains within striking distance of a 4 1/2-year high against the dollar.
        Ms. Yellen indicated the economy is slowly gaining strength, particularly in spending and production. But she reiterated concerns about slack in the labor market, something reinforced by April's jobs report released last Friday.
        Despite her overall positive assessment of the U.S. economy, Ms. Yellen's testimony failed to generate any strong gains for the dollar against rivals. Investors' belief that the Fed is no closer to raising interest rates, which would help the currency, likely held back the dollar's appreciation, analysts said.
        "There was nothing new from Yellen, so that means status quo for the Fed's outlook for monetary policy," said Omer Esiner, chief market analyst in Washington, D.C., at currency brokerage Commonwealth Foreign Exchange Inc. "We'll need a shift in the market's expectations of Fed policy leading toward a rate hike for the dollar to meaningfully rally."
        The Fed has said it would consider unemployment and inflation, among other data points, as gauges in determining the degree to which the U.S. economy is recovering from the financial crisis. In its most recent meeting one week ago, the Federal Open Market Committee left its key interest rate unchanged near zero and reduced its monthly bond purchases by $10 billion, a program it has used to stimulate the economy which has weighed on the dollar.
        The New Zealand dollar fell against major currencies Wednesday after Reserve Bank of New Zealand Governor Graeme Wheeler criticized the currency's strength and threatened to intervene and to slow down the pace of interest-rate increases. The kiwi lost 0.8% against the U.S. dollar, to $0.8671, and 0.6% versus the yen, to Ґ88.36.
        Write to James Ramage at james.ramage@wsj.com
        (END) Dow Jones Newswires

        May 07, 2014 17:01 ET (21:01 GMT)