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By Bloomberg

Currency volatility is poised for its biggest weekly drop since 2010 after Federal Reserve Chair Janet Yellen reiterated Wednesday that the central bank’s timetable for raising interest rates is flexible.

A gauge of the dollar remained weaker following Yellen’s testimony to a House committee, a day after she told a Senate panel that the labor market was improving even as inflation and wage growth remain too low. A measure of expected currency swings has fallen every day this week as euro-region finance ministers agreed to a package of economic measures for Greece on Tuesday. Australia’s dollar slumped after a report showed business spending declined more than analysts forecast.

“Yellen did a good job of containing markets from racing ahead” with bets for higher rates and a stronger dollar, said Satoru Igarashi, a senior foreign-exchange strategist at Mizuho Securities Co. in Tokyo. “Volatility is falling considerably.”

Trader expectations for price swings in foreign-exchange markets slid to 9 percent as of 12:22 p.m. in Tokyo, on track for its lowest closing level Dec. 9, according to Deutsche Bank AG’s Currency Volatility Index. It spiked to a three-year high of 12.5 percent on Jan. 16. The 1.4 percentage point decline this week would be the biggest since June 2010.

The dollar bought 118.93 yen from 118.86 yen in New York, and was little changed at $1.1364 per euro.

Fed’s Pledge

Yellen repeated that the Fed’s pledge to be “patient” on starting to raise borrowing costs means an increase is unlikely for “at least the next couple” of meetings. The central bank adopted the guidance in December and repeated it in January.

She added that a rate increase “could be warranted at any meeting.” The Fed has held its target for the federal funds rate at virtually zero since December 2008 to bolster economic growth.

“Yellen’s second day of testimony wasn’t as hawkish as everyone hoped, so while there’s still a chance of a June rate hike, people are now thinking the timing may be a little later,” said Kazuo Shirai, a Los Angeles-based trader at MUFG Union Bank NA. “The dollar continues to see some selling on the back of that.”

The Bloomberg Dollar Spot Index, a gauge of the currency versus 10 major peers, was little changed at 1,164.03 from 1,163.13 in New York. Before Yellen spoke Tuesday, the measure had climbed to almost the Feb. 11 peak, which was its highest in data going back to 2004.

Traders see a 55 percent chance the Fed will raise the benchmark by its October meeting, according to futures data compiled by Bloomberg. That’s down from 59 percent on Feb. 23.

U.S. Growth

The dollar has been supported in 2015 by an improving economy. Gross domestic product will expand 3.1 percent this year, compared with 2.14 percent across the Group of 10, according to economists surveyed by Bloomberg News.

Data Thursday may show consumer prices in the world’s largest economy dropped last month for the first time since 2009. The consumer-price index probably slipped 0.1 percent from a year earlier, according to the median estimate of economists in a Bloomberg survey.

The dollar is the best performer in a basket of 10 developed-nation peers over the past year, gaining 15.1 percent, according to Bloomberg Correlation-Weighted Indexes. The yen declined 2.6 percent while the euro dropped 6.4 percent.

Investor expectations of price swings in the euro against the dollar over a one-month horizon dropped to a two-month low of 8.4 percent Thursday after Greece won a four-month extension of its aid program earlier in the week.

“More notable than spot moves is the collapse in foreign exchange volatility that is under way, with Yellen and Greece behind us,” Adam Cole, head of global currency strategy at Royal Bank of Canada’s RBC Capital Markets unit, wrote in an e- mailed client note.

Australia’s dollar weakened against all its major peers Thursday after the statistics bureau in Sydney said business investment slumped 2.2 percent in the fourth quarter from the previous period. The median estimate among economists surveyed by Bloomberg News was for a 1.6 percent decline.

The Aussie dropped 0.4 percent to 78.53 U.S. cents.