Investing.com – The dollar slumped against a basket of global currencies, pressured by a surge in the euro, after the European Central Bank hinted at tapering emergences stimulus while Fed chair Janet Yellen reiterated the need to raised rate “very gradually”.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 1.06% to 96.08.
The dollar extended losses, as Fed chair Janet Yellen offered relatively little input on monetary policy Tuesday, reiterating that it was appropriate to raise interest rates “very gradually to a level that [is] likely to remain quite low by historical standards for a long time”.
“We intend to very gradually shrink our balance sheet, we will not be selling assets and we’ve been providing more and more detail on that,” she added.
Prior to Yellen’s speech, the dollar had been nursing losses against euro, as the single currency surged to $1.1349, after Mario Draghi, President of the European Central Bank, praised the eurozone’s economic recovery, fuelling expectations that the ECB was close to tapering its emergency stimulus measures.
Bullish economic data failed to lift sentiment on the greenback, as The Consumer Confidence Index rose in June to 118.9, despite expectations for it to drop, The Conference Board announced Tuesday.
Meanwhile, GBP/USD rose to $1.2831, after the release of the Bank of England’s Financial Stability Report suggested that UK banks would have to raise the amount of capital they held in storage to protect against any shocks to the financial system.
A surge in oil prices strengthened oil-linked Canadian dollar, with USD/CAD falling to C$1.3159, down 0.63%.
USD/JPY traded at Y112.15, up 0.26%.