The U.S dollar, on Friday, March 3, pulled back against the yen and euro, as investors await Federal Reserve Chairwoman Janet Yellen’s speech for any confirmation of a March rate increase.
The greenback USDJPY, -0.01% was changing hands at ¥114.17, compared with ¥114.40 late Thursday in New York. The U.S. currency had touched ¥114.59 on Thursday, its highest level since Feb. 15.
The WSJ Dollar Index BUXX, -0.02% , a measure of the U.S. dollar against a larger basket of major currencies, was down 0.05% at 91.93.
The euro EURUSD, +0.3236% was moderately higher at $1.0519, compared with $1.0507 late Thursday.
Investors were awaiting Fed Yellen’s comments after a string of upbeat comments central bank officials such as Brainard bolstered prospects for the Fed to raise rates at its upcoming policy meeting on March 14-15.
The market has now moved from a 20% probability in February to 90% when using Bloomberg calculations, pointed out Chris Weston, chief market strategist at IG, in a note to clients.
Ahead of Brainard, Federal Reserve Bank of New York President William Dudley said a case for raising rates in March has become “a lot more compelling.”
Nomura Securities chief FX strategist Yunosuke Ikeda said in a note that the dollar remains well below the levels consistent with the Fed’s rate increases this year, due to slow, but steady, buildup of long yen positions as means of hedging risks such as the upcoming election in France.
He said the dollar should stand at ¥115 if the currency market fully prices in two rate increases for 2017, and ¥120 if it is anticipating the increase three times. But risks such as the election in France could lead the dollar to likely struggle around a ¥115-¥116 range, even if rate predictions secures the market consensus of three rate hikes this year.
In other currency trade, the euro EURJPY, +0.32% gained to ¥120.11 midday from ¥120.18 late Thursday, Marketwatch reports.
