Investing.com - The dollar rose to two-week highs against a
basket of major currencies on Tuesday following testimony on the
monetary policy outlook to Congress by Federal Reserve Chair Janet
Ms. Yellen said the U.S. economy is continuing to improve but
added that the recovery is not yet complete. She said that
considerable slack still remains in the labor market and wage
growth remains weak.
The remarks came during testimony to the Senate Banking
Committee in Washington.
The Fed chair reiterated that rates are likely to remain on hold
for a considerable period after the bank's quantitative easing
Interest rates could rise sooner more quickly if the labor
market was to improve more quickly than expected, she said, but
added that if the economic recovery is disappointing interest rates
would remain accommodative.
U.S. data released on Tuesday painted a mixed picture of the
The Commerce Department reported that U.S. retail sales rose
just 0.2% in June, below forecasts for a 0.6% increase. Retail
sales for May were revised up to 0.5% from a previously reported
A separate report showed that manufacturing activity in New York
state rose to a four year high this month. The Empire state
manufacturing index rose to 25.6 from 19.3 in June. Analysts had
expected the index to decline to 17.0.
USD/JPY was up 0.16% to 101.70, while USD/CHF added 0.40% to
trade at 0.8955.
The euro fell to session lows, with EUR/USD down 0.35% to
The euro came under pressure earlier in the day after data
showing 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.
Sterling initially touched six-year highs against the greenback
following the remarks, with GBP/USD hitting 1.7192, the highest
since October 2008, before pulling back to 1.7146.
The pound rallied earlier Tuesday after data showing that the
annual rate of inflation in the U.K. accelerated more quickly than
expected in June bolstered expectations for a rate hike by the Bank
Elsewhere, NZD/USD was down 0.60% to 0.8752, while AUD/USD lost
0.44% to trade at 0.9349.
The Canadian dollar fell to three-week lows, with USD/CAD rising
0.41% to 1.0756.
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, was up
0.32% to 80.47, the highest since July 3.
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