Investing.com - The dollar continued to hover at two-month highs against the other major currencies on Tuesday, as expectations for a U.S. rate hike next month continued to support the greenback and investors eyed the release of U.S. data later in the day.
USD/JPY was steady at 111.06, off Monday’s three-week highs of 111.44.
The dollar remained supported after Federal Reserve Chair Janet Yellen said Friday it would be appropriate for the central bank to raise rates “gradually and cautiously” in the coming months if the economy and the labor market continue to pick up as expected.
Market participants were eyeing a string of U.S. data due later Tuesday, including reports on personal spending and consumer confidence, for further indications on the strength of the economy.
But the yen also strengthened after data overnight showd that Japanese factory output unexpectedly rose in April despite a series of earthquakes in the south of the country.
The data tempered expectations that the Bank of Japan could ramp up its monetary easing as soon as next month after Prime Minister Shinzo Abe on Monday announced plans to delay a scheduled sales tax increase.
EUR/USD was little changed at 1.1136, off Monday’s 10-week lows of 1.1097.
Eurostat said consumer price inflation fell by 0.1% this month, in line with forecasts, and following a final reading of a 0.2% drop in April.
Core CPI, which excludes food, energy, alcohol, and tobacco costs increased by 0.8% in May, also in line with expectations and up slightly from 0.7% a month earlier.
The dollar was higher against the pound, with GBP/USD down 0.35% at 1.4590 and lower against the Swiss franc, with USD/CHF down 0.10% at 0.9914.
The Australian and New Zealand dollars stronger, with AUD/USD up 0.75% at 0.7236 and with NZD/USD gaining 0.43% to 0.6724.
The Australian Bureau of Statistics said on Tuesday that building approvals increased by 3.0% in April, confounding expectations for a 3.0% drop.
A separate report showed that Australia’s current account deficit narrowed to A$20.8 billion in the first quarter from A$22.6 billion in the fourth quarter of 2015. Analysts had expected the current account deficit to narrow to A$19.5 billion in the last quarter.
In New Zealand, data showed that the ANZ business confidence index climbed to 11.3 in May from a reading of 6.2 the previous month.
Elsewhere, USD/CAD edged up 0.15% to trade at 1.3067.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 95.74, close to the previous session’s two-month peak of 95.96.