Dollar Trades Cautiously Against The Major Currencies Ahead Of Fed Testimony

Dollar Trades Cautiously Against The Major Currencies Ahead Of Fed Testimony

The U.S. Dollar hit its one-year low today against the Japanese Yen, which is considered to be a safe haven asset, as investors remained nervous about the future trajectory of the world markets.

Weaker against yen

Amidst the global markets rout, USD/JPY wiped off nearly 0.36% to 114.70, retreating from the lowest level of 114.51, it hit today. Today’s losses brought the U.S. Dollar to the level lowest since November 2014. Heavy sell-off in Japan’s Nikkei also boosted the demand for the yen as market participants are jittery about the global health and euro zone recovery.

The sentiment around the equities weakened this week as a slew of data hinted that the growth across the largest economies is slowing down. Investors believe that negative interest rates in the eurozone, U.S. and Japan will erode the credit quality of the banks, which could push the markets into another recession. The strength in the yen is on the rise even as the Bank of Japan announced negative interest rate policy, which lowers the interest rate offered by a currency.

Against other currencies

At the same time, the euro is lower against the greenback after registering a high of 1.1338 a day earlier. EUR/USD pair was seen trading 0.26% lower at 1.263. The U.S. dollar managed to recover against the Swiss franc, retreating from its four-month lows against the latter. USD/CHF gained 0.18% to 0.9745, a level substantially higher than the previous day’s lows of 0.9693. The British Pound continued to journey northward against the greenback at 1.4503, higher by 0.23%.

Up ahead, the markes will be waiting for Federal Reserve Chair, Janet Yellen’s testimony before Congress. Her tone will serve as an important indication of the Central Bank’s monetary tightening stance as the key economic data released over the last few days were mixed and failed to indicate anything with clarity.

The U.S. Dollar index was broadly positive by 0.11% to 96.15 against the host of other global currencies.