Dollar slips as Yellen shows no rush to raise rates

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The dollar edged down against the yen on Wednesday after Federal Reserve Chair Janet Yellen suggested the Fed won't be rushed into kicking off the U.S. interest rate tightening cycle.

In closely watched remarks before the U.S. Senate Banking Committee on Tuesday, Yellen said the Fed is preparing to consider interest rate hikes "on a meeting-by-meeting basis".

Yellen also said any refinement of its language should not be read as an indication that it will increase interest rates at any particular meeting.

Dollar bulls were disappointed by the absence of a more concrete timeframe for beginning the Fed's rate tightening cycle.

"While it is clear that the Fed still seems geared towards hiking rates, possibly mid-year, I think Yellen didn't give a particularly concrete assessment of that," said Mitul Kotecha, head of FX strategy, Asia-Pacific, for Barclays in Singapore.

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The dollar slipped 0.2 percent to 118.73 yen. The dollar had set a 12-day high of 119.84 yen on Tuesday in a knee-jerk reaction to early headlines from Yellen's testimony, but later gave back those gains as markets figured the Fed is in no hurry to raise rates.

However, the dollar didn't move too far from recent levels, still moving inside the 118.11-120.48 yen range it has stuck to over the past two weeks.

"Yellen's latest statements were taken as dovish more or less. But the removal of the word 'patient' at the March meeting now looks certain, and that would provide an opportunity to buy the dollar again," said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.

The euro edged up 0.1 percent to $1.1346, having pulled up from Tuesday's intraday low of $1.1288.

The euro zone's approval of Greece's reform plan, a requirement for Athens to receive a four-month loan extension, shored up the common currency.

The Australian dollar rose 0.6 percent to $0.7874, aided by the greenback's broad weakness and a survey showing that activity in China's mammoth factory sector edged up to a four-month high in February.

The Australian dollar is often seen as a liquid proxy of Chinese growth prospects due to Australia's large trade exposure to China.