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Dollar trims losses after Yellen emphasises confidence on inflation outlook

The US dollar further trimmed its losses on Wednesday after Janet Yellen reiterated her view that a strengthening labour market will boost inflation to meet the central bank’s targets.

“With a strong labour market … the conditions are in place for inflation to move up,” the Federal Reserve chief said at a press conference, adding that it is “important not to overreact” to individual data points.

Ms Yellen’s remarks came after the latest reading on consumer prices released on Wednesday missed Wall Street’s expectations and fell further from the Fed’s goal of 2 per cent annual growth. She also said that one-time factors may be holding back the growth rate, saying that “data can be noisy”.

The dollar index, which measures the buck against six major developed market currencies, cut its decline for the day to 0.08 per cent, from as much as 0.67 per cent earlier.