Dollar edges higher before Yellen testimony

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Investing.com - The dollar edged higher against a basket of major currencies on Tuesday as investors awaited congressional testimony by Federal Reserve Chair Janet Yellen later in the day.

Traders were awaiting fresh indications on the future direction of monetary policy after last week's minutes of the Fed's June meeting revealed little new information on when rates could start to increase.

USD/JPY inched up to session highs of 101.65 from 101.52 late Monday, while USD/CHF was up 0.13% to 0.8929.

The yen showed little reaction after the Bank of Japan left its monetary policy target unchanged at the end of its two-day policy meeting on Tuesday and slightly pared back its forecast from growth in this fiscal year.

EUR/USD was down 0.16% to 1.3596 after data showed that German economic sentiment deteriorated unexpectedly in July, hitting the lowest level since December 2012.

The ZEW index of German economic sentiment fell to 27.1 this month from 29.8 in June. Analysts had expected the index to tick down to 28.0.

The pound surged to session highs after data showed that the annual rate of inflation in the U.K. accelerated more quickly than expected in June. Consumer prices rose 1.9% on a year-over-year basis last month, accelerating from 1.5% in May and well above expectations of 1.6%.

The retail price index, a broader measure of the cost of living, rose to 2.6% in June from 2.4% in May.

GBP/USD climbed 0.33% to 1.7140 from around 1.7080 before the release of the data.

The New Zealand dollar was hovering within striking distance of three year highs, with NZD/USD at 0.8797, while AUD/USD was down 0.27% to 0.9367.

The Canadian dollar was at almost three-week lows, with USD/CAD at 1.0736. The loonie, as the Canadian dollar is also known, remained under pressure after unexpectedly weak domestic employment data last week indicated that the country's central bank will stick to its dovish stance on rates.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, eased 0.10% to 80.29.

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This article appears in: Investing , Forex and Currencies

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