Investing.com – The dollar rose to one-month highs against the other major currencies on Wednesday, one day after Federal Reserve Chair Janet Yellen indicated that rates could rise sooner than expected if the recovery in the labor market continues.
EUR/USD was down 0.29% to 1.3528, the lowest since June 16, 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 US 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 dipped, with GBP/USD slipping 0.08% to 1.7131, off a nearly six-year high of 1.7190 struck on Tuesday. The dip lower came in spite of data showing 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 rose to one week highs against the yen, with USD/JPY easing up 0.09% to 101.76 and was also higher 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 0.18% to 0.9353 and NZD/USD falling 0.68% to 0.8707.
Sentiment on the commodity linked dollars was hit after data on Wednesday showed that China’s economy expanded at an annual rate of 7.4% in the second quarter, recovering only slightly 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 was little changed near three-week lows ahead of the Bank of Canada’s rate statement later in the session, with USD/CAD at 1.0754.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.21% to 80.61, the most since June 18.