* Euro rises ahead of ECB's Draghi speech in Strasbourg
* Bank of Japan, China data feature this week
* Fed's Yellen to testify at Congress on Tuesday, Wednesday
By Jemima Kelly
LONDON, July 14 The dollar edged up against the
yen on Monday as investors awaited Federal Reserve Chair Janet
Yellen's congressional testimony later in the week for clues on
the outlook for U.S. monetary policy.
U.S. Treasury yields have fallen and Fed Funds futures show
investors are pushing back policy tightening expectations
following Fed minutes that suggested the central bank was in no
rush to hike rates. So a lot will depend on what Yellen says,
particularly on the back of an improvement in U.S. data in the
"Investors are hoping for Yellen to say something
substantial. The Fed, it seems, will tolerate a bit more
inflation before it will tighten rates," Commerzbank currency
strategist Peter Kinsella said.
"The key is U.S. yields, and if they are not moving higher,
it's unlikely to translate into anything substantial for the
dollar," he said.
In the euro zone, data showed that industrial production
dropped sharply in May, highlighting the fragile state of the
European Central Bank President Mario Draghi will address a
European Parliament committee in Strasbourg later on Monday, and
the single currency's recent strength against the dollar may be
mentioned. ECB policymakers have in the past said the exchange
rate's strength worsens the disinflationary situation in the
The euro was up 0.15 percent at $1.3626, lifted by
talk of buying by long-term investors in London trade, while the
dollar was up 0.1 percent against the yen at 101.48. The
euro rose 0.3 percent against the yen to 138.30 yen,
recovering from last week's five-month low of 137.50 yen.
Investors also have their eyes on a policy review by the
Bank of Japan on Tuesday, though it is widely expected to
maintain its strategy and broader economic outlook.
The BOJ may trim its growth forecast for the current year,
sources familiar with its thinking said, reflecting soft exports
and a bigger-than-expected fall in household spending after a
sales tax hike in April, though the revision would not lead to
any policy changes for now.
Demand for the safe-haven yen faded on Friday as concerns
eased about the health of Portugal's largest bank and its impact
on the euro zone financial system.
Speculators increased their bullish bets on the U.S. dollar
in the latest week, with the value of the dollar's net long
position rising to $10.34 billion in the week through July 8,
according to the data from the Commodity Futures Trading
Commission released on Friday.
Stephen Gallo, European head of currency strategy at the
Bank of Montreal, said he expected action this week in the
Canadian dollar. The central bank will announce its latest rate
decision on Wednesday, followed by inflation data on Friday.
The Canadian dollar weakened to a more than two-week low
against the greenback late last week after data showed the
country's economy unexpectedly lost jobs last month, solidifying
expectations the Bank of Canada will keep rates unchanged.
The dollar was flat against the Canadian counterpart,
trading at C$1.0736.
Meanwhile, the Australian dollar stabilised, having fallen
late on Friday as the country's central bank chief again said
the currency was too strong.
The Aussie last traded at $0.9396, having dipped as
low as $0.9370. Traders said a slew of Chinese economic data on
Wednesday could have a bearing on the Australian dollar, given
the Asian powerhouse is Australia's largest trading partner.
(Additional reporting by Anirban Nag in London; Editing by Hugh