The dollar scaled a one-month high against a basket of major currencies on Tuesday, having remained bid after comments from Federal Reserve Chair Janet Yellen reinforced a tightening bias on interest rates. The dollar index .DXY last traded at 96.604 after reaching a one-month high of 96.714. It rode the momentum from a surge on Monday when dollar bulls were still cheering Yellen's remarks. Against the yen, the dollar touched a two-month high of 121.79, edging closer to an eight-year peak above 122.04. "It's a dollar-driven market right now, rather than a yen-focused one. Yellen made it clear that the Fed will hike rates and under such conditions the question for participants is what currency to sell," said Bart Wakabayashi, head of forex at State Street in Tokyo. "It appears that shorting the yen has gathered momentum once the dollar rose above 121 yen." In a highly anticipated speech on Friday, Yellen made clear the central bank was poised to raise interest rates this year. She said recent softness in economic data was largely due to "transitory factors" including a harsh winter and labor disputes on West Coast ports. "The central scenario still points to a September lift-off," analysts at ANZ wrote in a note to clients. "That leaves the USD bulls marginally with the upper hand; we say marginally because markets are already largely expecting the same and you need something additional to trigger fresh momentum." Yet, Yellen was quick to stress that incoming economic data will be vital in determining the pace of the tightening process. Hammering home that point, Fed Vice Chair Stanley Fischer on Monday said the process of returning to more normal levels of interest rates will take a few years. Still, the Fed is a long way ahead in the process of normalizing policy compared with the European Central Bank and Bank of Japan, which have ultra-loose policies firmly in place. The ECB's stance, along with ongoing worries about Greece, should keep the euro pressured against the greenback, traders said. The common currency was last 0.3 percent lower at $1.0944 EUR=, having in the last few days retreated from a high of $1.1468. The euro also wallowed against the Japanese currency. It was last at 133.33 yen EURJPY=R following a descent to a three-week low of 133.10 yen. The Greek government, still trying to reach an agreement with its lenders to unlock fresh loans, weighed on the euro by saying it needed aid urgently in order to make good on its debt obligations. The greenback held its ground versus commodity currencies such as the Australian dollar, which hovered just above a three-week low of $0.7804 AUD=D4 set on Monday. Following in the wake of Friday's stronger-than-expected core consumer price index release, Tuesday's durable goods orders will be among the U.S. indicators providing the latest health check of the world's largest economy. ECONUS Source: Reuters
