(Recasts, adds fresh quotes)
* Yellen speech awaited, ADP payrolls data looms
* Investors wary of verbal intervention from Draghi
* Sterling near six-year highs on upbeat data
By Anirban Nag
LONDON, July 2 The dollar hovered just above a
two-month low against a basket of currencies on Wednesday, with
the focus on Federal Reserve Chair Janet Yellen's speech later
in the day and a private sector survey of the U.S. labour
The euro lost some steam on concerns about verbal
intervention from policymakers about a strengthening currency.
Sterling held strong near six-year highs against the dollar
on more evidence of an upswing in the housing market which added
to expectations that the Bank of England will tighten policy
before the end of the year.
The dollar index was steady at 79.847, not far from a
low of 79.740 struck on Tuesday. The dollar eased slightly
against the yen, trading at 101.46 yen, and not far from a
six-week low of 101.235 yen struck on Monday.
Investors will eye the ADP private sector survey due at 1215
GMT along with Yellen's speech at 1500 GMT. Her recent dovish
bias, especially after the latest Federal Reserve meeting, has
been one of the main factors that have led investors to cut
favourable positions in the dollar.
"At the time Yellen seemed determined to give as little
support as possible to rate hike speculation," said Esther
Reichelt, currency strategist at Commerzbank.
"This is unlikely to be any different today. But the market
is waiting for Fed signals and therefore already small hints can
be sufficient to affect the dollar."
The dollar's recent drop has helped the euro recover all of
the ground lost since the European Central Bank announced a new
round of monetary easing a month ago. The bank has its next
policy meeting on Thursday.
The euro was steady at $1.36715, having hit a
six-week high of $1.3701 on Tuesday. The euro has gained more
than 1 percent in two short weeks, a move that is likely to
frustrate the ECB. President Mario Draghi recently warned that a
strengthening currency in a low inflation environment was cause
for serious concern.
"A non-event ECB may help the euro squeeze higher, at least
initially. We would sell into any bounce, however, as the euro
short-term rates converge to zero and given that the Fed/ECB
balance sheet ratio may be close to topping out," said Valentin
Marinov, currency strategist at Citi.
"Verbal intervention by Draghi or indications of
unsterilized asset purchases as soon as the fourth-quarter could
send the euro lower against risk-correlated currencies and the
Sterling held firm near six-year highs following a survey
which showed British house prices rose at their fastest annual
pace in more than nine years last month.
Investors pushed sterling to fresh six-year highs after a
survey on Tuesday, which showed British manufacturing growing at
its fastest in seven month, added to the case for a rise in
interest rates this year, well ahead of the United States.
The pound, which scurried to $1.7167 on Tuesday,
its highest since October 2008, traded firm at $1.7150. A return
to $1.7322 will mark its 50 percent retracement of the late-2007
to early-2009 tumble from $2.1162 to $1.3500.
Sterling also held near a 1-1/2-year high against the euro,
which changed hands at 79.705 pence per euro, near
the low of 79.59 set last month.
(Editing by Foo Yun Chee)