Celina Jade
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Celina Jade in Markets at a glance,

Dollar Declines From 11-Month High Before Yellen Speaks

The dollar headed for its biggest weekly gain versus the euro in more than three months before Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi speak today in Jackson Hole, Wyoming.

The U.S. currency retreated yesterday from an 11-month high against the euro as technical indicators signaled its recent advance was too fast. The Bloomberg Dollar Spot Index reached the highest in six months after minutes this week of the Fed’s July meeting suggested policy makers may increase interest rates sooner than anticipated. The Korean won gained against all its major peers, whileIndonesia’s rupiah rose to a three-week high.

“The story of the week has been significant U.S. dollar strength, based on encouraging data and the Fed minutes,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney. “The story overnight has just been some position trimming before Jackson Hole.”

The dollar slid 0.1 percent to $1.3295 per euro as of 7:19 a.m. in London from yesterday, when it reached $1.3242, the strongest since Sept. 10. The dollar was still set for a 0.8 percent weekly advance, the biggest since the period ended May 9.

The greenback declined 0.1 percent to 103.70 yen from yesterday, when it touched 103.96, the highest since April 4. It’s poised for a 1.3 percent advance this week, the most since the five days ended March 7. The euro bought 137.86 yen from 137.92.

RSI Signal

The dollar’s 14-day relative-strength index against the yen closed at 77 yesterday, while the equivalent gauge versus the euro was at 69, near the 70 level that some traders see as signaling an asset is overbought and may be about to reverse course.

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major counterparts, was little changed at 1,026.27 from yesterday, when it reached 1,029.64, the most since Feb. 4.

Futures traders saw about a 51 percent chance the Fed will raise its key interest rate to at least 0.5 percent by July, according to data compiled by Bloomberg. The central bank has kept its benchmark rate at almost zero since December 2008.

Yellen is scheduled to deliver a speech titled “Labor Markets” at the Jackson Hole symposium. The three-day meeting of central bankers and economists began yesterday.

“Expectation that Fed Chair Janet Yellen’s speech will be less hawkish at today’s Jackson Hole meeting is triggering a weaker dollar,” said Jude Noh, chief currency trader for Suhyup Bank in Seoul. “Investors are adjusting positions.”

The won rose 0.6 percent, the most in a week, to 1,017.70 per dollar, paring its five-day loss to 0.1 percent. Australia’s dollar gained 0.2 percent to 93.22 U.S. cents.

The rupiah rose to a three-week high after Indonesia’s Constitutional Court rejected yesterday a challenge to the results of the July 9 election, clearing the final hurdle for Joko Widodo to become president in October.

The rupiah advanced 0.2 percent to 11,663 per dollar. It touched 11,643 earlier, the strongest level since Aug. 1.

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