Investing.com - The dollar was lower against most of the other major currencies on Thursday following dovish comments from Federal Reserve Chair Janet Yellen while the Canadian dollar was near 13-month highs after its country's central bank hiked interest rates.
The dollar was weaker against the yen, with USD/JPY sliding 0.17% to a one-week low of 112.95 by 06.55 AM ET.
In testimony before Congress on Wednesday, Yellen said the economy is on a strong enough footing for the Fed to raise rates and begin winding down its massive bond portfolio.
She also emphasized that inflation is below target and noted that it is a particular “uncertainty” that could affect monetary policy.
Investors were looking ahead to Friday’s U.S. inflation figures for June for their potential impact on Fed policy.
Sterling was higher against the dollar, with GBP/USD advancing 0.33% to 1.2924.
The pound received a boost after Bank of England policymaker Ian McCafferty said the bank should rethink its current policy of not unwinding its huge quantitative easing program until interest rates have risen close to more normal levels.
The greenback was touch lower against the Canadian dollar, with USD/CAD at 1.2735, not far from the 13-month low of 1.2679 set on Wednesday after the Bank of Canada hiked interest rates.
It was the first rate increase by the BoC in nearly seven years, making it the first major central bank to join the Fed in tightening monetary policy.
Other commodity linked currencies were also higher, with AUD/USD rising 0.73% to 0.7736 and NZD/USD surging 1.02% to 0.7333 following the release of stronger-than-expected Chinese trade data for June.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.59, not far from the nine-month low of 95.22 plumbed in late June.
The euro was lower, with EUR/USD slipping 0.2% to 1.1389, pulling away from the 14-month high of 1.1489 set on Wednesday.
The euro turned lower after European Central Bank governing council member Ilmars Rimsevics said quantitative easing will continue for “a few years.”
The comments came amid heightened speculation that the ECB is moving closer to scaling back its ultra-loose monetary policy.