Dollar up following Fed testimony
At 0700 AEDT on Wednesday, the local unit was trading at 78.26 US cents, up from 77.70 cents on Tuesday.
Yellen told a congressional committee that the US labour market still showed some weakness and inflation continued to fall, making any interest rate hike unlikely before June.
The Australian dollar was losing ground before the testimony because many observers thought she would appear more eager to raise the Federal Funds Rate.
Westpac, senior market strategist, Imre Speizer, said her testimony helped push the Australian dollar and US stocks higher.
“While cautiously upbeat on the economy, she made clear the Fed is in no rush to hike but also added policy must be normalised as inflation increases,” he said.
“She repeated her December comment that the Fed funds rate will not change over the next two meetings. Markets were probably braced for a more hawkish assessment.”
Speizer said it’s possible the Australian dollar could go as high as 78.50 US cents but that depends on the outcome of Australian wage price data for the December quarter, and Chinese manufacturing data for February, both of which are due to be released on Wednesday.