Stronger dollar close to one-month highs

0 – The dollar was close to one-month highs against the other major currencies on Wednesday, a day after Federal Reserve Chair Janet Yellen sparked speculation over the possibility of U.S. rate hikes.

EUR/USD was down 0.24% to 1.3528, from 1.3561 late Tuesday.

The dollar remained supported after Ms. Yellen said Tuesday that rates could rise sooner if the economic recovery continued to improve. However, the Fed chair also said that if the recovery was disappointing monetary policy would remain accommodative.

The dollar showed little reaction after data on Wednesday showed that U.S. producer prices rose by a larger than forecast 0.4% in June, bringing the annual rate to 1.9%.

The single currency remained under pressure after European Central Bank President Mario Draghi said earlier this week that large scale asset purchases are “squarely” within the ECB’s mandate.

The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.

The pound was almost unchanged, with GBP/USD at 1.7137, off a nearly six-year high of 1.7190 struck on Tuesday. Earlier Wednesday official data showed that the U.K. unemployment rate fell to 6.5% in the three months to May, the lowest since late 2008.

The number of people claiming unemployment benefit in the U.K. fell by 36,300 in June, compared to expectations for a decline of 27,000.

The robust employment report added to indications that the economic recovery in the U.K. is deepening, underlining expectations that the Bank of England will hike rates before the end of the year.

The dollar was close to one week highs against the yen, with USD/JPY at 101.65 and gained ground against the Swiss franc, with USD/CHF adding 0.27% to trade at 0.8981.

The Australian and New Zealand dollars were lower, with AUD/USD down 0.10% to 0.9360 and NZD/USD falling 0.57% to 0.87070.8717.

Sentiment on the commodity linked dollars was hit after data on Wednesday showed that economic growth in China picked up to just 7.5% from a year earlier in the second quarter, from an 18 month low of 7.4% in the first three months of the year.

Meanwhile in New Zealand official data on Wednesday showing that annual inflation rose less than expected in the second quarter dampened expectations for further monetary tightening.

The Canadian dollar fell to three week lows after the Bank of Canada left rates on hold at 1.0%, in a widely anticipated decision.

USD/CAD touched highs of 1.0794, the most since June 20 before retracting some of those gains, pulling back to 1.0761.

In its rate statement, the central bank said the recent increase in inflation was due to temporary factors and reiterated that the future direction of monetary policy would be data dependent.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.19% to 80.59, the most since June 18.

Source By Breaking News Website | BreakingNews.WS