The dollar rose 0.2 percent against a basket of six currencies, crawling away from its lowest since July 5 hit on Friday.
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Japan’s Nikkei fell 1.5 percent as the yen had soared after the Bank of Japan’s stimulus plans underwhelmed investors.
While the us economy will probably grow only 1.5 percent to 1.75 percent this year, Evans said that level of growth could be enough to push unemployment, now at 4.9 percent, closer to the 4.75 percent he sees as consistent with full employment.
Disappointing GDP data continues to put broad pressure on the US Dollar which was down against the Japanese Yen and the common currency Euro in Tuesday trading.
Expectations that the Fed would raise rates this year combined with easier monetary policy elsewhere would make the dollar more attractive to yield-seeking investors, but things are going the other way.
Federal Reserve Bank of Chicago President Charles Evans said an interest-rate increase could be warranted this year as the economy picks up steam, even though he’s still anxious that inflation is too low.
Weaker-than-expected manufacturing data released on Monday continued to hold the greenback down.
Fed funds futures are pricing in less than a 40 per cent chance of an interest rate hike by December.
“The (GDP) data dented the dollar’s previously positive tone, which was the result of an otherwise positive run of economic reports over recent weeks”, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The nonfarm payrolls report for July will be published on Friday.
Yet in a June 6 speech, Yellen said that “the economy is now fairly close to the FOMC’s goal of maximum employment”.
The Bank of Japan said Friday it will nearly double its annual exchange-traded fund purchases to 6 trillion yen ($59 billion), while leaving bond buying and its negative deposit rate unchanged.
Overnight, the iShares MSCI All Country Asia ex Japan ETF (AAXJ) rose 0.05%.
Prior to the Federal Open Market Committee’s (FOMC) July meeting, the United States dollar (USD) was strengthening on the basis that the committee would indicate the expected month in which the Federal Reserve would increase interest rates.
The yen, which had surged about three per cent to 101.97 to the dollar on July 29, changed hands at 102.59 per dollar.
Direct fiscal spending will total only about 7 trillion yen, two people briefed on the matter told Reuters on Thursday.
“Already the amount was leaked, and the market is bracing for it”, said Tohru Sasaki, head of Japan market research at JPMorgan Chase Bank in Tokyo.
“The market will not be surprised in a good way”, he said.
Asian markets showed limited reaction to a better-than-expected private survey on China’s factory sector.
The benchmark S&P/ASX 200 rose 25 points or 0.45 percent 5,587.40, its highest level in almost a year, and the broader All Ordinaries index gained 26.10 points or 0.46 percent to finish at 5,670.10.
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In context of growth overseas, the official Chinese manufacturing sector survey unexpectedly fell below the 50-mark again, albeit only marginally, but with overall order growth only modest and export orders continuing to fall.
