US dollar index drops further after Yellen; ends week modestly higher

The dollar lost momentum during the last session of the week and following a speech by Janet Yellen. The Federal Reserve chairwoman mentioned that the central bank was likely to raise rates at the next meeting, to be held in two weeks, if the economy evolves as expected. 

Fed's Yellen: Rate hike at next meeting "would likely be appropriate" if data is good enough

Despite the strong signals toward a rate hike, the greenback lost momentum and pulled back, probably amid some profit taking. The US dollar trimmed weekly gains and even turned negative against the euro. The European currency was the top performer among the most traded. 

The US dollar index on Thursday peaked at 102.25. The highest level since January 11. On Friday, it made a bearish correction, that accelerated after Yellen’s speech. Near the end of the week, it was trading slightly below 101.50, at the lowest in almost three days and marginally above the level it had a week ago. 

Fed, Trump and NFP 

Greenback remains supported by Trump’s announcements and expectations of a rate hike from the Fed in March, that rose sharply during the week. The US dollar ended Friday on a weak tone amid a recovery in US bonds. 

Regarding economic data, next week, the key number will be released on Friday with the US official employment report. “We estimate a non-farm payroll of 190,000 and some reversal in average hourly earnings after weakness in wages in financial activities dragged them down in January”, wrote analysts from Danske Bank. 

Economic and analysts will also wait for detail about Trump policies, particularly those regarding the tax reform plan. 

Fed's Yellen: There is a "great deal of uncertainty" on Trump's economic policies