TOKYO: The dollar fell Wednesday as US Federal Reserve chief Janet Yellen hinted that a rate hike was unlikely before the summer, while the euro held up as Greece delivered a reform package critical to extending its bailout.
In Tokyo, the dollar slipped to 118.78 yen from 118.94 yen in New York, as the euro ticked up to $1.1352 against $1.1342.
The common currency weakened to 134.83 yen from 134.90 yen in US trading.
At the start of two days of congressional testimony on Tuesday, Yellen signalled that the Fed is preparing for a rate hike this year, but she hinted such a move would not come before June.
She said the US central bank can be patient before raising interest rates, stressing that the US labour market still showed cyclical weakness and inflation continued to slow.
"A high degree of policy accommodation remains appropriate," Yellen told the Senate Banking Committee.
The dollar has rallied this year on the growing strength of the US economy and expectations of higher interest rates, but Yellen's comments suggested any rate hike was still a ways off.
"Yellen was decidedly noncommittal to the idea of a rate hike around the middle of the year," said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange.
"The reaction of the market is weaker dollar, lower yields, higher equities -- the classic reaction you'd see from a slightly dovish Fed," he told Bloomberg News.
Euro trading was fixated on Greece, which submitted a list of reforms to meet demands made by its international creditors in exchange for extending the debt-saddled country's bailout.
Despite reservations expressed by the International Monetary Fund and European Central Bank over the plan, eurozone ministers signed off on the package, which gives Athens a four-month lifeline to pay its bills and sidestep an almost certain exit from the eurozone.
Several parliaments, including Germany's, must now approve the extension before the current bailout expires on Saturday.
On Wednesday, banking giant HSBC's closely watched survey showed Chinese factory activity expanded in February, snapping two consecutive months of contraction.
The dollar was mostly weaker against other Asia-Pacific currencies.
It slipped to 44.16 Philippine pesos from 44.31 pesos on Tuesday, to 12,877.00 Indonesian rupiah from 12,904.95 rupiah, and to 62.04 Indian rupees from 62.34 rupees.
The dollar also fell to Sg$1.3568 from Sg$1.3602, to Tw$31.43 from Tw$31.65, and to 1,099.10 South Korean won from 1,108.75 won.
It was unchanged at 32.56 Thai baht.
The Australian dollar climbed to 78.80 US cents from 77.73 cents after the upbeat Chinese manufacturing report -- China is an important driver of Australia's economy.
The Chinese yuan fetched 18.98 yen against 19.02 yen.
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