(Updates market action, changes dateline from LONDON)
* Yellen speech later eyed for support of March rate hike
* Poll gain for Macron adds to support for euro
By Saqib Iqbal Ahmed
NEW YORK, March 3 The dollar weakened against a
basket of major currencies on Friday ahead of a speech by
Federal Reserve chief Janet Yellen that could affirm
expectations for an interest rate hike on March 15.
The dollar is up about 0.74 percent this week, its fourth
straight weekly gain, boosted by hawkish comments from a slew of
Fed speakers that have led to a dramatic revising of rate hike
Speeches from Yellen and Fed Vice Chair Stanley Fischer on
Friday are now widely expected to be the final clues to the
timing of the next rate hike.
Futures traders now are pricing in an 80 percent chance of a
Fed hike in March, up from 35 percent on Tuesday, according to
the CME Group's FedWatch Tool.
"The markets are looking for validation for the increase in
Fed rate hike expectations from comments from Fed Chair Yellen.
That's the key issue for the market right now," said Shaun
Osborne, chief FX strategist, at Scotiabank in Toronto.
The dollar was down 0.32 percent at 101.87 against a basket
of six major currencies. On Thursday, the index hit a
seven-week high of 102.26.
Against the Japanese yen the greenback was little
The euro rose 0.48 percent against the dollar after a poll
showed French far-right candidate Marine Le Pen's chances in the
country's presidential election dimming.
While the French election news may be supportive for the
euro at the margin, the political race has not necessarily been
the main driver for the euro's recent weakness, Scotiabank's
"That's more about the shift in relative yields and monetary
stance given the move in short-term rates in the U.S.," he said.
U.S. two-year Treasury yields hit their highest in more than
7-1/2 years on Thursday.
Rate hike expectations also weighed on the Australian
and New Zealand dollars, both of which fell against the
greenback. The kiwi dollar was down 0.69 percent, while the
Aussie was down 0.09 percent.
"People were not expecting the Fed to move in March so last
month they were putting on more (interest rate) carry trades in
these currencies," said Bank of Montreal head of European FX
strategist Stephen Gallo. "That is clearly coming off."
Mexico's peso strengthened to its strongest level
since the U.S. presidential election in November, after U.S.
Secretary of Commerce Wilbur Ross said a sensible trade deal
with Mexico will help the battered currency.
(Additional reporting by Patrick Graham in London; Editing by