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* U.S. dollar declines amid Yellen's remarks
The dollar clung onto modest gains early on Wednesday after Federal Reserve Chair Janet Yellen held the line of "gradual increases" in U.S. rates, while sterling's short-covering rally lost momentum a day ahead of Britain's EU referendum.
The greenback briefly popped back above 105.00 yen JPY= for the first time in nearly a week and last stood at 104.79. The euro dipped to $1.1255 EUR=, peeling away from a two-week peak of $1.1383 set on Monday.
The dollar index .DXY was back above 94.000, rebounding from a two-week trough of 93.425.
The U.S. dollar decreased against most major currencies on Tuesday as investors were digesting Federal Reserve Janet Yellen's remarks during her semi-annual testimony.
In her testimony before the U.S. Senate Banking Committee on Tuesday, Yellen reiterated the cautious approach to raising interest rates that the central bank signaled last week after its policy meeting.
She said that the central bank expected interest rates to "remain low" for some time, in view of the weak global economy and sluggish productivity growth.
Yellen pointed out "considerable uncertainty" about the U.S. economic outlook, which includes slow job gains, weak investment, slow productivity growth, and vulnerabilities in the global economy.
"Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress toward our 2 percent objective," Yellen said.
* Fed will be cautious about interest rate increases until it is clear the job market is holding up
New polls released over the weekend showed those wanting to stay in the European Union holding a slim majority over the Leave campaign. The polls indicated a swing back to "Remain" after the killing of British politician Jo Cox.
In late New York trading, the euro fell to 1.1259 dollars from 1.1313 dollars of the previous session, and the British pound increased to 1.4677 dollars from 1.4674 dollars. The Australian dollar went up to 0.7470 dollars from 0.7458 dollars.
The dollar bought 104.76 Japanese yen, higher than 103.93 yen of the previous session. The dollar slipped to 0.9613 Swiss francs from 0.9627 Swiss francs, and it inched down to 1.2794 Canadian dollars from 1.2809 Canadian dollars. Enditem
Meanwhile, the closely-watched Britain's referendum will be held on Thursday to decide whether Britain should leave or remain in the European Union.
Euro falls after ECB chief Mario Draghi flags potential for more stimulus.
The euro dropped the most in a week against the US dollar
Inflation dynamics in the euro area remain "rather subdued" even as the economic recovery "gained momentum at the start of the year," Draghi said at European Parliament hearing in Brussels. He also said a new set of targeted loans for European banks are in the pipeline as announced previously, a measure aimed at encouraging banks to provide more credit to companies and households.
The euro fell 0.5 per cent to $US1.1263 as of 1.32pm in New York. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, rose 0.2 per cent.
Federal Reserve chair Janet Yellen said the June 23 vote in the UK over whether to remain in the European Union poses threat to the economy, and may have significant economic repercussion if Britain leaves. She also offered a subtle change to her outlook from last week, saying she and her colleagues were on watch for whether, rather than when, the US economy would show clear signs of improvement.
Oil futures finished with a loss on Tuesday, pulling back from their highest level in more than a week as investors weighed continued uncertainty ahead of the U.K. referendum on European Union membership and its potential impact on energy demand. The moves came ahead of weekly data that are expected to show a decline in U.S. crude supplies.
July West Texas Intermediate crude CLN6, -0.85% lost 52 cents, or 1.1%, to settle at $48.85 a barrel on the New York Mercantile Exchange after touching a low of $48.16. It had climbed over the past two trading sessions to settle Monday at the highest level since June 9. The July contract expired at the settlement, contributing to market volatility. August WTI crude CLQ6, +0.48% which became the front-month contract, settled at $49.85, down 11 cents, or 0.2%.
August Brent crude LCOQ6, +0.28% fell 3 cents, or 0.1%, to $50.62 a barrel on London’s ICE Futures exchange.
Referecen: WA TODAY, Xinhua, Forexlive, Market Watch
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