Investing.com - Federal Reserve Chair Janet Yellen was extremely dovish when she spoke to the Economic Club of New York earlier this week, saying that the U.S. central bank should proceed cautiously as it looks to raise interest rates.
In a speech on Tuesday, Yellen said global risks to the U.S. economy, including low oil prices and uncertainty over China, justified taking a cautious approach to tightening monetary policy.
The dovish comments contrasted with recent hawkish remarks by some Fed officials who indicated that the central bank could act as soon as next month to raise interest rates.
Investors and economists dialed back their rate hike expectations in wake of Yellen’s dovish outlook, with traders of interest-rate futures now seeing no rate rise before November.
The prospect of less U.S. interest rate hikes this year drove the dollar down against its major rivals. The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slumped to 94.41 on Thursday, a level not seen since October. It last stood at 94.47.
The dollar index was on track for its biggest monthly fall since April 2015 and its largest quarterly loss since March 2011, as dollar hawks retreated amid skepticism over the Fed's ability to raise interest rates as much as it would like this year.
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