* Dollar index trades tightly
* Fed's Yellen to testify at Congress on Tuesday, Wednesday
(Adds New York trading, quotes and changes byline and dateline;
NEW YORK, July 14 The dollar drifted around the
unchanged mark against most major currencies on Monday but edged
higher against the Japanese yen as investors awaited
congressional testimony by Federal Reserve Chair Janet Yellen on
U.S. monetary policy.
The dollar was up 0.2 percent against the yen at 101.57
. The euro also rose 0.3 percent against the yen, to
138.36 yen, recovering from last week's five-month
low of 137.50 yen.
"There's a little backing up of U.S. yields and the rise in
the stock market are helping give the dollar a little bit of a
firmer tone against the yen," said Marc Chandler, global head of
market strategy at Brown Brothers Harriman & Co in New York.
The U.S. dollar index of six currency trading pairs
was unchanged at 80.190 as U.S. Treasury yields perked up.
Benchmark 10-year Treasuries were down 4/32 in price
to yield 5.377 percent. U.S. stocks opened up.
U.S. Treasury yields have mostly declined in recent weeks
and Fed Funds futures show investors are pushing back policy
tightening expectations following Fed minutes released last week
that suggested the central bank was in no rush to hike rates.
So a lot will depend on what Yellen says during
congressional appearances set for Tuesday and Wednesday,
particularly since U.S. data in the second quarter has signaled
a strengthening economy.
"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.
Currency traders are looking for clues on macroeconomic
trends and will also focus this week on the Empire State
Manufacturing Survey on Tuesday and the Philadelphia Fed Survey
on Thursday, Chandler said.
"The Empire State and the Philly Fed surveys will give us our
first read of the third quarter. That will be more important
than confirming a strong second quarter," he said.
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 $0.9394, 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 Jemima Kelly and Anirban Nag in
London; Editing by Peter Galloway)