USD traded lower on Yellen’s dovish comments

The USD traded lower the major currencies on Wednesday after dovish ECB comments from Europe, bullish BoE reports from the U.K. and continuing uncertainty over the continuation of the Federal Reserve’s monetary policies.

Federal Reserve Vice Chair Janet Yellen said the U.S. economy was performing “far short” of potential, suggesting the central bank will not withdraw its stimulus program soon.

In U.S. trading hours on Wednesday, EUR/USD was up 0.20% at 1.3463.

ECB executive board member Peter Praet told the Wall Street Journal that the bank may cut deposit rates to below zero and begin asset purchases to raise the inflation closer to its target of just below 2%.

The USD was under pressure in U.S. afternoon trading hours on Wednesday amid sentiments that tapering may begin in March at Yellen’s first monetary policy meeting.

Data released on Tuesday indicated that Germany’s annual consumer price index slowed to 1.2% in October, in line with market forecasts, down from 1.4% in September.

Also today the Office for National Statistics on Wednesday reported that the number of individuals claiming for unemployment benefits in the U.K. dropped by 41,700 in October, better than expectations for a decline of 35,000 people.

The Pound gained support after the BoE’s quarterly inflation report released today predicted that the U.K.’s unemployment rate will drop faster than it expected three months ago.

The USD was down against the pound, with GBP/USD up 0.77% at 1.6027.

The USD was down against the Yen, with USD/JPY down 0.29% at 99.35, and down against the Swiss Franc, with USD/CHF down 0.27% at 0.9150.

The USD was down against its Canadian, Australian and New Zealand counterparts, with USD/CAD down 0.28% at 1.0465, AUD/USD up 0.25% at 0.9324 and NZD/USD increasing 0.42% at 0.8256.

The USD index was down 0.29% at 81.22.

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