By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - The dollar gave up earlier gains to trade little changed on Friday after Federal Reserve Chair Janet Yellen gave no indication a U.S. interest rate rise was imminent, even though she acknowledged the case for a hike has increased recently.
The U.S. currency rallied after Yellen's speech but soon fell as investors digested some of its dovish details.
At a gathering of central bankers from round the world in Jackson Hole, Wyoming, Yellen said improvements in the U.S. labor market and expectations for moderate economic growth have boosted the case for a rate rise, supporting what the rate futures market has been pricing in for some time.
"Her comments still fall a little bit short of what dollar bulls would want to see in that she doesn't make a case for an immediate increase, still keeps the outlook data-dependent and then went on to talk a great deal about how the Fed plans to deal with future recessions," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Futures markets are still pricing a roughly 24 percent chance that rates will rise in September, and a 57 percent likelihood of a December move, according to the CME's FedWatch.
Friday's data on the second estimate of U.S. gross domestic product showed that growth in the second quarter for the world's largest economy was slightly lower than previously thought.
U.S. GDP expanded at a 1.1 percent annual rate, the Commerce Department said, down slightly from the 1.2 percent rate reported last month.
There were positive elements in the report though, said currency strategist Vassili Serebriakov of Credit Agricole in New York. Serebriakov cited upward revisions in consumer spending and an improvement in business investment figures from the preliminary estimate.
The dollar index <.DXY>, which measures the currency against a basket of six major counterparts, was little changed at 94.75.
The dollar was flat against the yen as well at 100.55 yen <JPY=>.
"The risk for dollar/yen is clearly to the downside after Yellen's speech," said Ron Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida. "There is still a month to go before the Bank of Japan meeting and who knows what they're going to do."
Japanese data released early on Friday added to evidence that the BoJ has reason to increase its stimulus next month as the economy slips back toward deflation.
(Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Sam Forgione in New York; Editing by Lisa Von Ahn and James Dalgleish)