The dollar slid against the yen on Wednesday, falling 0.66% as investors await comments from Fed chair Janet Yellen. The currency pairing fell below its four-month high on Tuesday, as Yellen prepared to give her semi-annual monetary policy testimony.
The testimony will be presented before Congress over Wednesday and Thursday.
The comments will be the focal point of forex brokers and traders waiting to dissect Yellen’s comments. Investors will look through the comments for clues on when the Fed will raise the interest rate. Yellen is expected to discuss how the central bank will start to trim back its balance sheet going forward.
Subdued inflation and slow wage growth are a major concern for investors that expect a higher risk against raising the interest rate.
Minneapolis Fed President Neel Kashkari stated that he has difficulty believing the economy is overheating when wage growth has remained low. Inflation will be a major driver in whether or not interest rates will be raised in the latter part of the year.
The dollar is expected to remain under pressure going into the end of the week, as concerns over Donald Trump Jr.’s e-mails with a Russian lawyer point to a possible connection between the Trump administration and Russia.
The U.S. dollar index is up slightly at 0.06% on the day against a basket of six other currencies.
Simon Potter, New York Federal Reserve market chief stated in a prepared speech, “I encourage you to adopt the Code as a benchmark for your firm’s activities in the wholesale FX market and use the Statement of Commitment to demonstrate that adoption to your fellow participants.”
The comments come during a conference held by FX Week that promotes 55 principles that cover ethics, information sharing, risk management, compliance, settlement, governance, execution and confirmation in the foreign exchange market.
Potter suggests that FX trading platforms adopt and support the code. Potter states that the New York Fed is assessing its own activities and evaluating steps to take to ensure proper support for the code.
The news comes as campaigns to tighten the rules for forex traders in several countries accelerate. Kenya’s industry remains unregulated, with the Capital Markets Authority calling for new legislation this year. Regulations help eliminate fraud in the industry.
Potter’s comments will also remain under investor scrutiny going into the end of the week, as further regulations and codes of conduct will help protect currency investors.