Dollar up on Fed chief high rate comments

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TOKYO (AFP) – The dollar rose against the yen and euro Thursday, buoyed by comments from Federal Reserve chief Janet Yellen that an interest rate hike was likely this year as the world s top economy strengthens.

In Asian midday trading, the greenback fetched 123.90 yen, up from 123.79 yen in New York where it also rose on the rate-hike comments.

The euro weakened to $1.0936 against $1.0947 and 135.43 yen from 135.51 yen in US trading, after a brief uptick on news that Greek lawmakers had passed reforms crucial to the country s bailout.

In testimony to Congress, Yellen stuck to the position that a long-awaited rate rise would come “at some point this year” if “the economy evolves as we expect”.

Her comments came as the Fed s closely watched Beige Book showed the economy grew in May and June, with all 12 of the bank s districts enjoying expansion.

Most analysts predict a rate rise from record lows either in September or December.

“US dollar gains have been assisted by a combination of a series of moderately better-than-expected incoming US economic data, and Fed chair Janet Yellen s prepared testimony to Congress,” Ray Attrill, global co-head of forex strategy at National Australia Bank, said in a commentary.

In Greece, lawmakers gave the go-ahead to major reform proposals demanded by creditors — including reforming taxes, pensions and labour rules — to refinance the country and keep it in the eurozone.

However, while Prime Minister Alexis Tsipras won the day, he suffered a major mutiny in his own party over the deeply unpopular reforms.

Now the agreement must go before the domestic parliaments of some of the other 19 members of the eurozone, with all eyes in particular on EU powerhouse Germany, which is set to vote on Friday.

“It looks like we could put Greece on the back burner for a while,” Keith Poore, head of investment strategy at AMP Capital Investors, told Bloomberg News.

2015-07-16

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