Dollar Vulnerable Versus Aussie, Kiwi on Yellen's Dovish Stance

The dollar held a three-day slump against the Australian and New Zealand currencies after dovish comments from Federal Reserve Chair Janet Yellen this week spurred a rally in global Equities and higher-yielding assets.

The U.S. currency was set to complete its biggest monthly loss against the Aussie since October 2011 after the Fed chief said Tuesday the central bank should “proceed cautiously” in raising interest rates. The greenback has fallen against all of its 16 major counterparts in March, with commodity currencies such as Brazil’s real, Australia’s dollar and South Africa’s rand among the biggest gainers.

“A dovish Yellen was positive for stocks and sparked dollar selling and buying of risk assets,” said Keisuke Hino, a foreign-Exchange trader at Mizuho Bank Ltd. in New York. “Selling was most prominent against commodity currencies.”

The dollar has dropped almost 7 percent against the Aussie and 5 percent against the kiwi this month, deepening losses for the quarter. It gained 0.1 percent to 76.63 U.S. cents per Aussie and rose 0.2 percent to 69.10 cents per kiwi as of 10:17 a.m. in Tokyo Thursday.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major peers, was also little changed after falling 0.4 percent on Wednesday. The gauge has slumped 3.9 percent this quarter, the most since the period ending in September 2010. The dollar rose 0.1 percent to 112.50 yen and $1.1328 per euro.

--With assistance from Mika Otsuka To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Naoto Hosoda, Jonathan Annells

By: Chikako Mogi

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