Investing.com - The dollar rose against a currency basket on Thursday, to trade near one-year highs after hawkish comments by the chairman of the U.S. Federal Reserve underlined expectations for two additional rate hikes by the central bank this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.32% to 95.14 by 04:22 AM ET (08:22 AM GMT), within close reach of the eleven-month high of 95.25 reached in late June.
Demand for the dollar continued to be underpinned after Fed Chairman Jerome Powell gave an upbeat assessment of the U.S. economy during congressional testimony on Tuesday and Wednesday, and downplayed the impact of uncertainty over U.S. trade policy on the outlook for additional rate hikes.
The dollar was higher against the yen, with USD/JPY adding on 0.13% to trade at 113.00, near Wednesday’s six-month highs of 113.13.
The euro was pressured lower by the stronger dollar, with EUR/USD losing 0.26% to trade at 1.1609.
Sterling was near 10-month lows against the U.S. currency, with GBP/USD down 0.34% to 1.3025.
The pound came under pressure on Wednesday as unexpectedly weak UK inflation data diminished chances for an August rate hike by the Bank of England.
Sterling has also been hit by a fresh bout of Brexit uncertainty with Prime Minister Theresa May facing criticism from both sides of the Brexit divide over her strategy for leaving the European Union.
The pound was also lower against the euro, with EUR/GBP ticking up 0.1% to 0.8915, not far from the four month highs of 0.8931 set on Wednesday.
Meanwhile, the Chinese yuan fell to a fresh one year low against the dollar overnight as concerns over trade tensions continued to build.
The currency, which is usually closely controlled by Beijing, fell to 6.7985 in offshore trading.
The move lower has prompted speculation that Chinese policymakers are allowing their currency to weaken in order to offset the impact of U.S. trade tariffs, by making their exports more competitive.