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Dollar dips on Fed rate hike doubts

Published 08/23/2016, 07:14 AM
© Reuters. Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration

By Jemima Kelly

LONDON (Reuters) - The dollar weakened across the board on Tuesday, as investors shifted their focus away from hawkish remarks on U.S. interest rates by Federal Reserve officials and towards a speech on Friday by Fed Chair Janet Yellen.

The greenback was given a boost over the weekend when Vice Chairman Stanley Fischer said the Fed was getting close to its job and inflation targets, prompting speculation that a rate hike could come as soon as September.

But having hit a five-day high of 94.958 (DXY) against a basket of currencies in early trade on Monday, the dollar dipped 0.1 percent to 94.411, taking it close to a two-month low of 94.077 touched last week.

Yellen will speak at the annual meeting of world central bankers in Jackson Hole, Wyoming, at the end of the week.

"Will Yellen deliver anything this Friday?" asked Saxo Bank's head of currency strategy in London, John Hardy. "She has been a very cautious mover since assuming the helm in early 2014."

Investors are anxious to see whether Yellen will echo the hawkish views expressed by Fischer and New York Fed President William Dudley, or take a more subdued stance in line with the July Fed policy meeting minutes, which suggested the central bank was not in a hurry to raise rates.

"There's still a huge amount of scepticism as to whether the Fed really can hike, irrespective of the hawkish remarks we've heard from Fed bankers," said Rabobank currency strategist Jane Foley, from London.

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The dollar briefly dipped below 100 yen

The biggest mover among developed-world currencies on Tuesday was the New Zealand dollar, which rose as much as 1 percent to $0.7340

The euro edged up 0.1 percent to $1.1332

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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