There wasn’t enough buying to match the weakness in the dollar.
But the euro retraced its gains after ECB’s Draghi defended the central bank’s easy monetary policy. He hinted the European Central Bank could trim its stimulus this year.
But softer-than-expected USA data overnight gave rise to some caution.
Ahead of that, the dollar slipped 0.5% against major currencies. The trade-weighted index rose to 78.70 from 78.56.
Sterling GBP= has recovered 1.5 cents from lows hit in the past 10 days due to uncertainty over the makeup of the next government, helped by a shift by several Bank of England policymakers towards raising interest rates this year.
“We’ve seen the sector bounce back but I don’t think you see the confidence that was there in tech prior to a couple of weeks ago”, said Brad McMillan, chief investment officer for Commonwealth Financial. “In the case of inflation, I’ve seen the factors exerting downward pressure as temporary”.
During a question period, Yellen was asked how she would characterize her relationship with President Donald Trump, who had attacked her handling of the Fed policies as “shameful” during last year’s campaign. The Federal Reserve raised US interest rates for the second time this year last month but it was only the fourth time since the collapse of Lehman Brothers ignited the global financial crisis.
Gold was also supported by a sell-off in the US equities.
Alphabet fell 1.2 per cent to US$960.55 after European Union antitrust regulators hit the tech giant with a record US$2.7 billion (RM11.5 billion) fine.
Elsewhere, regional markets were sluggish early on Tuesday as Wall Street provided few catalysts after the S&P 500 .SPX and the Dow .DJI closed overnight effectively flat. All three major indexes, however, turned lower after the Republicans chose to postpone the vote on healthcare reform until after July 4.
A weaker yen, a boon to export-reliant Japan, usually underpins the Tokyo market as the economy looks to global demand to drive growth.
That dour view may come as a surprise given that the Federal Reserve raised interest rates earlier this month and plans to continue to do so gradually to keep the US economy from overheating. The latter will be influenced by a number of economic reports including the Goods Trade Balance, Preliminary Wholesale Inventories and Pending Home Sales.
“The main reason behind the weakness of the dollar, which has lost its upward momentum since the Fed rate hike, is USA yields stuck at low altitude”, said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. A drop in Treasury yields will be bullish for gold as well as a steep sell-off in stocks.