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FOREX-Dollar slides as investors look to Yellen comments on stimulus

Gertrude Chavez-Dreyfuss
·4 min read

* Dollar weakens vs most currencies * Yellen to testify at Senate Finance Committee * Euro, Aussie dollar gain * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 19 (Reuters) - The dollar dropped for a second straight session on Tuesday, with broader risk appetite turning more positive, as investors prepared for U.S. Treasury Secretary nominee Janet Yellen to talk up the need for major fiscal stimulus and commit to a market-determined exchange rate. The dollar's fall came after a 2% rise so far in 2021, a gain which caught off guard many investors who had bet on a further decline following its weakness in 2020. The dollar has been helped in January by rising U.S. Treasury yields and some investor caution about the strength of the global economic recovery from the coronavirus pandemic. But most analysts are sticking with their calls for a weaker dollar from here. Yellen is expected to appear before the Senate Finance Committee later on Tuesday. "Investors were clearly upbeat about the prospect of President-elect (Joe) Biden's $1.9 trillion dollar stimulus proposal," said Boris Schlossberg, managing director, at BK Asset Management in New York. He expects Yellen, who returns to government as Treasury Secretary after a stint as Federal Reserve chair, to have a very smooth confirmation hearing in which "she is likely to encourage lawmakers to pass the proposed package given the low level of interest rates." The Wall Street Journal on Monday reported Yellen will affirm a more conventional commitment to market-set currency rates in her Senate testimony on Tuesday. That contrasts with outgoing President Donald Trump, who often railed against dollar strength. The dollar index, which measures the currency against a basket of other currencies, dropped 0.3% to 90.481, but it was still above its more than two-and-a-half-year low of 89.206 touched at the start of this month. With the dollar weakening, the euro gained, rising 0.5% to $1.2134. The single currency was unaffected by Italian Prime Minister Giuseppe Conte's facing a confidence vote to stay in office. The result of the vote is due after 1800 GMT. More volatile and commodity-linked currencies, such as the Australian dollar, also benefited from the weaker U.S. currency, with the Aussie up 0.4% at $0.7712. Rising commodity prices in recent months have boosted currencies of countries with large commodity exports, such as Australia and Canada. "We continue to see scope for further gains in commodity-related currencies in the year ahead, which should benefit as well from the strengthening global recovery once vaccines are rolled out more widely," said Lee Hardman, an analyst at MUFG. Sterling rose 0.2% against the dollar to $1.3610. The dollar rose 0.2% against the yen to 103.93 yen, although still consolidating in a narrow range after reaching a one-month high of 104.40 last week. Emerging-market currencies were mostly higher but were some way off recent highs. ======================================================== Currency bid prices at 9:44AM (1444 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 90.4780 90.7680 -0.31% +0.00% +90.7680 +90.4010 Euro/Dollar $1.2134 $1.2077 +0.48% -0.69% +$1.2145 +$1.2075 Dollar/Yen 103.9600 103.6550 +0.26% +0.62% +104.0800 +103.6800 Euro/Yen 126.15 125.22 +0.74% -0.62% +126.2100 +125.2100 Dollar/Swiss 0.8877 0.8913 -0.39% +0.35% +0.8916 +0.8865 Sterling/Dollar $1.3612 $1.3588 +0.18% -0.37% +$1.3625 +$1.3581 Dollar/Canadian 1.2747 1.2754 -0.05% +0.11% +1.2754 +1.2720 Aussie/Dollar $0.7711 $0.7685 +0.36% +0.25% +$0.7725 +$0.7675 Euro/Swiss 1.0772 1.0755 +0.16% -0.34% +1.0781 +1.0757 Euro/Sterling 0.8913 0.8886 +0.30% -0.27% +0.8918 +0.8884 NZ $0.7118 $0.7113 +0.10% -0.85% +$0.7140 +$0.7107 Dollar/Dollar Dollar/Norway 8.5305 8.5895 -0.63% -0.61% +8.5940 +8.5200 Euro/Norway 10.3530 10.3695 -0.16% -1.09% +10.3890 +10.3340 Dollar/Sweden 8.3351 8.3703 -0.22% +1.69% +8.4053 +8.3140 Euro/Sweden 10.1142 10.1360 -0.22% +0.38% +10.1497 +10.0890 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London; Editing by Andrea Ricci)