NEW YORK: The dollar rose on Wednesday, climbing from nearly four-month lows against a basket of major currencies, after prepared remarks from Federal Reserve Chair Janet Yellen suggested that the US central bank had not taken a March interest rate increase off the table.
The dollar rose to a session high against the euro and pared earlier losses against the Japanese yen following the comments.
"Ms. Yellen seems to be maintaining her faith in the outlook of the US economy and still anticipates to raise rates.
That's what at the end of the day is supportive of the US currency," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The dollar rose 0.25 percent against a basket of currencies to 96.324, having touched its lowest level since October on Tuesday.
The greenback has shed more than 3 percent over the past two weeks as expectations of a 2016 interest rate rise have all but vanished. Concern over sliding commodity prices, a slowing Chinese economy and the health of European banks have also dampened dollar demand in favor of safe-haven assets such as the yen.
Fed funds futures rates show that markets see less than a 6 percent chance of a rate hike from the Fed in March, according to CME Group's FedWatch tool. Despite a shock move from the Bank of Japan to adopt negative interest rates two weeks ago, the yen hit a 15-month high of 114.05 per dollar on Tuesday and was up 0.3 percent on the day at 114.75 yen on Wednesday.
It has gained more than 6 percent since an initial fall on the BOJ's move.
The euro fell 0.5 percent to a session low of $1.1233 following the release of Yellen's comments.
Yellen's monetary policy report, released at 8:30 a.m. EST (1330 GMT), is viewed as a key hinge for market direction for the foreseeable future. She will testify before the House Financial Services Committee beginning at 10:00 am EST.
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