Weak US data, Yellen's stocks value warning hit dollar
[NEW YORK] The dollar fell sharply on Wednesday after weaker-than-expected US economic data and a warning from Federal Reserve Chair Janet Yellen that stock valuations were "quite high".
The euro surged to US$1.1348 around 2100 GMT from US$1.1185 at the same time Tuesday.
Fresh US data was relatively weak. Non-farm productivity fell 1.9 per cent in the first quarter year-over-year. It was the second straight quarterly fall.
Payroll firm ADP meanwhile reported the US added just 169,000 private-sector jobs in April, the second month in a row under 200,000.
The data came ahead of Friday's highly anticipated Labour Department jobs report.
"ADP doesn't have a reliable track record of predicting the tone of nonfarm payrolls but at the margin it suggests a slightly higher chance of disappointment on Friday," said Joe Manimbo of Western Union Business Solutions.
"A weak payrolls report would be the second in a row and risk a further bleeding of gains for the dollar." Fed Chair Yellen, speaking at a Washington conference, warned that "equity market valuations at this point generally are quite high," and said bond yields were low and risked sharp movements when the fed decides to raise rates.US bond prices tumbled in response.
The yield on the 10-year US Treasury rose to 2.24 per cent from 2.18 per cent on Tuesday, while the 30-year advanced to 2.99 per cent from 2.91 per cent.
Ms Yellen's remark about high values "would be consistent with a view to raise rates," said Kathy Lien of BK Asset Management.
AFP
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