The euro advanced against the dollar on Tuesday after neutral comments from Fed Chair Janet Yellen kept investors on their toes. Yellen’s remarks on Monday gave little insight into the Fed’s long-term path and the possibility of a summer rate hike.
The euro and dollar were trading in a tight range before finally settling at 1.1357 on the session. The euro is still riding high on Friday’s 2% surge after the release of the weakest U.S. jobs data in six years. The euro is now hovering near three-week highs against the greenback.
Janet Yellen, Fed Chair, spoke to a crowd at the World Affairs Council in Philadelphia on Monday and declined to give a timetable for the next rate hike. Her comments were a stark contrast to last week, when she strongly indicated that the Fed may raise rates in the next few months if gains in the labor market and inflation met the committee’s expectations.
Yellen expects the economic recovery to continue, but indicated that the Fed would not raise rates until economic uncertainties are resolved. The Fed Chair also pointed to a number of global economic uncertainties, including the potential Brexit, which may have significant economic repercussions.
Meanwhile, the pound advanced 1% against the dollar as new opinion polls show the “Remain” campaign is slightly ahead of the “Leave” campaign ahead of the EU referendum on June 23.
The pound reached a high of 1.4460 overnight against the dollar, but settled down to 1.4588 in early morning trade, up 1% from Monday.
The sterling also gained strength against the euro, with EUR/GBP at 0.7787.
The pound is being boosted by a recent Brexit poll in the Times newspaper that showed the “Remain” campaign one point ahead of the “Leave” campaign. Data from Betfair also shows support for staying in the EU, with 72% implied probability of Britain remaining.