Dollar drifts lower as market awaits Yellen rate comments

[NEW YORK] The dollar drifted lower against most other major currencies on Tuesday as traders debated whether China's slowdown and its effects on the global economy could delay a US interest rate hike.

The US currency was under pressure as "questions about China's slowing economy fanned skepticism in the Fed raising interest rates before year-end," said Joe Manimbo of Western Union Business Solutions.

Investors will be focused on Fed Chair Yellen's speech Wednesday at a community banking conference at the Federal Reserve Bank of St. Louis, hoping to find clues on the direction of US monetary policy.

Yellen's remarks last week indicating the first rate hike since 2006 was still on track for 2015 has been echoed by other Fed officials.

That left more analysts expecting the Fed to raise its zero-level federal funds rate at the mid-December policy meeting of the Federal Open Market Committee (FOMC), instead of the next one in late October.

The dollar fell to US$1.1254 against the euro, from US$1.1242 late Monday, and dipped to 119.75 yen from 119.93 yen. But it edged up against the British pound, which slipped to US$1.5157 from US$1.5174.

The market also awaited the Labour Department's US jobs report for September, due on Friday.

"This week has a decided look of range-trading as markets simply bide their time ahead of the NFP (nonfarm payrolls) report this Friday," said Boris Schlossberg of BK Asset Management.

"With so many FOMC members sounding considerably more hawkish than just a few weeks ago, any positive results in payrolls data, especially on the wage front, could finally convince the Fed that rates can be hiked from zero bound. Until then we are likely to see more seesaw action."

AFP