Dollar firm against weaker yen, pound slips lower

The dollar remained supported close to three-week highs against the yen on Tuesday but slipped lower against the euro following dovish sounding remarks from Federal Reserve Chair Janet Yellen. Dollar firm against weaker yen, pound slips lowerDollar holds near three-week highs vs.

yen, sterling slips USD/JPY edged up 0.12% to 103.33, holding just below the three-week highs of 103.43 reached on Monday. The dollar’s gains against the yen were held in check after Ms. Yellen said Monday that “considerable slack” still remained in the U.S. labor market and reiterated that the Fed’s commitment to economic stimulus will still be needed for some time. The yen remained under pressure as expectations that China will implement fresh stimulus measures to shore up slowing growth dampened safe haven demand for the Japanese currency. Data released on Tuesday showed that China’s official manufacturing purchasing managers’ index for March rose to 50.3 from 50.2 in February. However, a separate report showed that China’s HSBC manufacturing PMI fell to 48, the weakest level in a year-and-a-half, from a final reading of 48.5 in February. EUR/USD was up 0.17% to 1.3794, having recovered from Monday’s lows of 1.3720. The euro initially fell against the dollar on Monday after data showed that the annual rate of euro zone inflation slowed to 0.5% in March, the lowest since November 2009. The weak data added to pressure on the European Central Bank to implement fresh policy measures to stave off the threat of deflation in the region. The single currency showed little reaction after data on Tuesday showed that the euro zone unemployment rate was 11.9% in February, compared to expectations for 12.0%. The pound fell to session lows against the dollar, with GBP/USD down 0.25% to 1.6622. The drop in the pound came after data showed that the pace of the recovery in the U.K. manufacturing sector slowed unexpectedly in March, but the recovery remained solid and continued to drive strong job creation in the sector. The Markit U.K. manufacturing purchasing managers’ index fell to an eight-month low of 55.3 last month from a downwardly revised 56.2 in February. Analysts had expected the manufacturing index to tick up to 56.7. Meanwhile, USD/CHF was down 0.27% to 0.8822. The Australian dollar was lower, with AUD/USD falling 0.26% to 0.9239. The pair rose to four-month highs of 0.9302 earlier after the Reserve Bank of Australia left interest rates on hold at 2.5% in a widely anticipated decision. The Aussie subsequently came off highs after the central bank noted that the currency still remained high by historical standards. NZD/USD remained supported at 0.8672, holding just below the two-and-a-half year peaks of 0.8702 struck earlier in the session, while USD/CAD dipped 0.05% to 1.1043. The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged down 0.07% to 80.20.