Investing.com - The U.S. dollar traded close to flat against major currencies on Wednesday, despite stronger than expected U.S. economic data as markets pause amid congressional testimony from Federal Reserve Chair Janet Yellen.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was lower at 100.06, down 0.13%.
The dollar index was up in early trade Wednesday, after U.S. retail sales and inflation data beat expectations. In the 12 months through January, headline inflation, as measured by the Consumer Price Index (CPI) rose 2.5% beating expectations of 2.1%. Large gains in energy prices, especially crude oil prices over recent months, were one of the main components, which contributed to a spike in inflation.
However, the dollar pared gains almost immediately, as market focus shifted to a second day of congressional testimony from Fed chief Janet Yellen, who briefly mentioned that the U.S. economy was “close to achieving Fed mandates”.
Yellen’s early comments were seen as favourable for a March rate hike - Investing.com's Fed Rate Monitor Tool showed that 27% of traders expect the Fed to raise interest rates at its next meeting in March.
Overnight the yen was the worst performer against the dollar but has since recovered from early session lows. USD/JPY traded flat at $114.16 at 12:40 EDT
Elsewhere, sterling slumped against the dollar, despite better-than-expected labour data. In January the number of people in the UK, who claimed unemployment benefits fell by 42,000 against expectations of a 5,000 increase.
GBP/USD traded lower at $1.2445, down 0.18%, at 12:40 EDT 5:40 GMT.
In what was a quiet day on the Euro-zone economic calendar, EUR/USD traded flat to higher at $1.0592 (12:40 EDT).