The US dollar steadied against the euro and yen on Wednesday as it awaited fresh cues from a U.S. Congressional appearance by Federal Reserve Chair Janet Yellen later in the session.
Janet Yellen provided dollar bulls with food for thought Friday by saying she expected a rate hike at some point this year, and investors will have a chance to hear her latest thinking at the semi-annual testimony.
The euro, which has lost 1.5 percent this week, was little changed at $1.1001. As the deal between Athens and its creditors consigned the Greek debt saga to the back burner, focus has shifted back onto differentials between U.S. yields and those in Europe and Japan.
The dollar was steady at 123.43 yen, hovering close to a two-week high of 123.74 scaled overnight.
Data showing China’s economy grew a slightly better-than-expected 7.0 percent in the second quarter sparked little reaction, with its recent stock market rout still fresh in memory.
The Australian dollar, often used as a liquid proxy for China plays, was up a modest 0.2 percent at $0.7467.
“The overall reaction to the Chinese data was limited due to the issue of reliability regarding the indicators. Moreover, Chinese equities are down after the data. Chinese equity movements currently provide currencies with bigger cues,” said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch in Tokyo.
Sterling stood tall after the Bank of England put the prospect of an interest rate hike front and centre.
The pound rallied to a two-week high against the dollar. It climbed as far as $1.5654 and last stood at $1.5643, following up on its best one-day performance in a month overnight.
“We think this move has further to run in the coming weeks and months as pricing for rate hikes still appears too distant in our view,” said Greg Moore, senior currency strategist at RBC Capital Markets.
Speaking to British lawmakers on Tuesday, BOE Governor Mark Carney said the time for a first rate hike since the financial crisis was getting closer.
Compared with the BOE news, the Bank of Japan’s well-anticipated decision on Wednesday to stand pat on monetary policy did not cause ripples, and focus shifted to Governor Haruhiko Kuroda’s media briefing at 0630 GMT.
The Bank of Canada also meets on Wednesday amid talk it could cut rates by a quarter point to 0.5 percent.
Greece would also fight its way back onto the front pages if Prime Minister Alexis Tsipras fails to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures to secure a new bailout.