U.S. economy needs only 'gradual' rate hikes - Fed's Yellen

Dollar Primed for Yellen Testimony Strategy for EUR  USD USD  JPY

Dollar Primed for Yellen Testimony Strategy for EUR USD USD JPY

Gold prices were unchanged on Thursday, as investors continued to cheer comments from Federal Reserve chair Janet Yellen suggesting that the pace of future rate hikes would be gradual while weak inflation data lifted sentiment.

Yellen cautioned that although the Fed's measure of inflation has been low recently, "it's premature" to say it is not on track to return to 2 per cent.

As Federal Reserve chair Janet Yellen testified before Congress today, one attendee had some attention-grabbing advice: buy bitcoin.

In the Asian trading, the Australian dollar rose to almost a near 4-month high of 0.7746 against the US dollar and almost a 5-month high of 87.90 against the yen, from yesterday's closing quotes of 0.7728 and 87.55, respectively.

Asian markets closed mixed: Tokyo's Nikkei slipped 0.5 per cent, Hong Kong's Hang Seng rose 0.6 per cent and China's Shanghai Composite fell 0.2 per cent.

In recent months United States inflation has moved further below the Fed's 2 per cent target even as the labour market, as measured by a 4.4 per cent unemployment rate, has strengthened.

The head of the USA central bank, the Federal Reserve, added that while rates will continue to rise, they would likely remain at historically low levels for some years to come.

Her assessment of the economy was optimistic. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could surge 49 points at the opening bell.

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She also predicted faster wage and price increases in light of strong hiring, spending and investment in the USA economy over the past few months.

The CPI, in particular, will garner interest because "if you take Yellen at her word the Fed is starting to second guess itself as to whether recent weakness is transitory", said ANZ Bank New Zealand senior economist Phil Borkin.

In what may be one of her last appearances before Congress, Ms. Yellen depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment, and was now being supported by stronger economic conditions overseas. On a month-on-month basis, the core CPI is expected to rise 0.2 per cent after a 0.1 per cent gain the previous month.

The dollar losses any gained momentum it had from the beginning of the week, as a matter of fact, the USD/CAD plummets to a staggering 2.3% low of 1.2681.The Canadian dollar continues to pack-a-punch with increasing stream from Poloz's positive comment on the Canadian economy, this makes the Canadian dollar the top currency among its G-10 peers.

On the other hand, holding firms climbed 0.08% or 6.99 points to 7,917.90; financials rose 0.06% or 1.33 points to 1,973.16; mining and oil went up 0.04% or 5.20 points to 12,744.01.

The trade-weighted index rose to 77.72 from 77.56.

She said such a high growth rate would require accelerating productivity growth to two percent from the current 0.5 percent, a big jump since increases of only a few tenths of a point are considered significant.

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