Dollar strengthens as Yellen reaffirms 2015 rate hike

[NEW YORK] The dollar firmed against other major currencies Wednesday, buoyed by Federal Reserve Chair Janet Yellen's reiteration that an interest rate hike remained likely this year as the economy improves.

In semi-annual testimony to US lawmakers, Ms Yellen stuck to the position of the last meeting of the Federal Open Market Committee, for a rate hike "at some point this year" if "the economy evolves as we expect." Kathy Lien of BK Asset Management said that dollar bulls were rejoicing at Yellen's hawkish comments.

"Not only did Yellen confirm that rates will rise this year but it is her view that waiting too long would mean rates would have to rise at a faster pace later," Ms Lien said.

Better-than-expected US June data released on Wednesday could add fuel to the Fed's rate hike plan. US producer prices rose for a second month, by 0.4 per cent, slightly higher than the 0.3 per cent analyst estimate. And industrial production rose 0.3 per cent, rebounding from two months of declines.

The Fed's Beige Book survey of the US economy found growth was "modest" or "moderate" across the country in May and June.

AFP