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FOREX-Dollar up as Powell reinforces rate hike views, hits 6-mth high vs yen

Published 18/07/2018, 10:18 am
© Reuters.  FOREX-Dollar up as Powell reinforces rate hike views, hits 6-mth high vs yen
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* Dollar/yen pops above 113.00 threshold for fist time since Jan

* Powell shows upbeat view on US economy, downplays trade war risk

* Sterling struggles near 3-wk lows vs dollar amid Brexit woes

By Shinichi Saoshiro

TOKYO, July 18 (Reuters) - The dollar was broadly higher on Wednesday, hitting a six-month high against the yen, after Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to steadily hike interest rates.

In closely watched congressional testimony on Tuesday, Powell said he saw the United States on course for years more of steady growth, while largely discounting the risks associated with a trade war. dollar was up 0.05 percent at 112.97 yen JPY= after going as high as 113.08, its strongest since January 9.

The euro was 0.05 percent lower at $1.1655 EUR= after losing 0.4 percent overnight.

"The dollar stands to gain further, particularly against the yen, with risk aversion in the equity markets petering out," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"And while long-term Treasury yields are not rising prominently, this is a reflection of investor demand for U.S. assets that generates a degree of dollar-buying."

Wall Street stocks rose on Tuesday, with the Dow Jones Industrial Average .DJI posting its fourth consecutive session of gains after Powell's optimistic analysis of the U.S. economy. .N

The pound stood little changed at $1.3104 GBP=D3 after slipping 1 percent the previous day.

In addition to the dollar's broad strength, sterling has come under pressure from British politics.

The currency fell to a three-week low of $1.3068 overnight as investors expected more Brexit challenges after Theresa May's government only narrowly won a parliamentary vote on post-Brexit trade with the European Union.

The dollar index against a basket of six major currencies .DXY edged up 0.1 percent to 95.051 after rising roughly 0.5 percent the previous day.

The Australian dollar was a shade lower at $0.7377 AUD=D3 , extending the retreat from Tuesday when it lost 0.45 percent against a broadly stronger greenback.

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