Dollar broadly lower, sterling at 4-1/2 year highs

The dollar was lower against the other main currencies on Thursday after dovish sounding comments from Federal Reserve Chair Janet Yellen, while sterling rose to four-and-a-half year highs amid growing expectations for a U.K. rate hike in the early part of next year.

USD/JPY was last trading at 102.05, down from Wednesday’s highs of 102.35.

The dollar softened after Fed Chair Janet Yellen said Wednesday that monetary policy will need to remain accommodative for some time, citing slackness in the labor market and low inflation.

The euro rose to four-day highs against the dollar, with EUR/USD climbing 0.34% to 1.3863.

In the euro zone, data on Thursday showed that German producer price inflation fell 0.3% in March from a month earlier and was down 0.9% on the year. This was below expectations for a 0.1% increase on the month and a 0.7% decline on the year.

The weak data added to concerns over the risk of deflation in the euro zone.

Sterling was trading at four-and-a-half year highs against the dollar, with GBP/USD up 0.22% to 1.6832, the highest level since November 2009.

The pound strengthened against the other major currencies after data on Wednesday showed that the U.K. unemployment rate fell to a five year low of 6.9% in the three months to February. The upbeat data bolstered expectations that the BoE could raise interest rates as soon as the first quarter of 2015.

The Swiss franc was also higher, with USD/CHF losing 0.37% to trade at 0.8784.

The Australian and New Zealand’s were almost unchanged, with AUD/USD dipping 0.08% to 0.9362 and NZD/USD trading at 0.8625.

Meanwhile, the Canadian dollars eased back from one-week lows, with USD/CAD slipping 0.09% to 1.1002.

The loonie, as the Canadian dollar is also known, remained under pressure after the Bank of Canada left rate on hold on Wednesday and said the future direction of monetary policy would continue to be data dependent.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.32% to 79.66.