Yellen, in a speech prepared on Tuesday, made a comment as President Joe Biden’s new economic investment programs come into play. She said the additional costs were small compared to the relative size of the economy.
The dollar’s appeal as a safe haven was further enhanced as the Nasdaq fell more than 2%, the S&P more than 1%, the Dow Jones Industrial Average fell 0.69% less steep, and Treasury yields fell.
Analysts believe that most of the good news has probably been heeded by the market.
“After a dramatic improvement during the first quarter, US economic expectations are in line with reality, which means that surprises are no longer shifting towards positive results,” said Carl Chamotte, chief market strategist at Cambridge Global Payments in Toronto.
“For many investors and momentum traders, some rebalancing – from risk-sensitive currencies to safe havens – makes a lot of sense at this stage,” he added.
Tuesday’s rebound reversed Monday’s losses following a disappointing US manufacturing report, sending the dollar 1% above its monthly low reached last week.
The dollar index, which measures the dollar’s value against a basket of other major currencies, rose 0.4% to 91.34, slightly below a two-week high. In April, it fell by more than 2%.
“There is currently no consensus on what will happen to the dollar in the remainder of the year, as it was at the beginning,” says the latest study by Tempus Inc.
“While some traders believe that the US dollar may rise due to future bond yields rising as inflationary expectations rise, others believe the dollar is currently overvalued and will only decline as the rest of the world plays successfully. catch-up. ”
Most of the gain in the dollar was recorded against antipode currencies, mainly the Australian dollar, although commodity prices were generally more resilient.
The dollar was up about 1% against the Australian dollar and the New Zealand dollar.
The euro fell 0.4% against the dollar to $ 1 in 2016. Against the yen, the dollar rose 0.2% to yen 109.32.
Sterling fell 0.1% to $ 1.3881 ahead of a meeting of the Bank of England on Thursday, which could announce a slowdown in its bond buying program as the vaccine rolls out to bolster the UK economy.
Elsewhere, Ethereum has hit another all-time high of $ 3,530 as speculators lift the hot cryptocurrency markets up. It last fell 6.3% to $ 3213.