* Yellen says labour market far from healthy, but improving
* NZD dips on soft CPI, Aussie shrugs off upbeat China GDP
* Sterling awaits jobs and wages data
By Anirban Nag
LONDON, July 16 The Australian and New Zealand
dollars fell on Wednesday as Chinese growth data raised some
questions about how long the growth would last, with some
investors cautious about a recovery without another burst of
The U.S. dollar clung to modest gains after the Federal
Reserve chief said rates could rise sooner if employment
In the European session, focus will be on the British pound
which hit near-six-year highs against the dollar on Tuesday
after a surprise jump in inflation. Jobs and wages data are due
at 0830 GMT and evidence that earnings are picking up will add
to the case that the Bank of England needs to raise rates soon.
"With unemployment falling, business surveys printing at
robust levels and now inflation close to the BoE's target level,
any sign of wage growth will effectively put the icing on the
cake as far as markets are concerned," said Peter Kinsella,
currency strategist at Commerzbank. "The third and fourth
quarter will be all about the pound dealing with higher rate
Sterling was flat at $1.7140, having scaled a
six-year high of $1.7192 on Tuesday after inflation and house
prices data prompted investors to raise bets that the BoE would
lift interest rates before the year ends. British inflation
surged to a five-month high last month and house prices rose at
their fastest pace in years.
The Australian dollar lost ground, shedding about 0.2
percent to $0.9350, even though China reported its
economy grew slightly faster than expected in the second
quarter, helped by government stimulus.
China is Australia's largest trading partner, making the
Aussie a proxy for China plays. This time, the currency got
little help from data.
Analysts said that might be because China's National Bureau
of Statistics also said a downturn in the property market could
create downward pressure on growth.
In New Zealand, the kiwi weakened after a report showed the
annual inflation rate reached 1.6 percent in the second quarter
versus expectations of 1.8 percent. That was well within the
Reserve Bank of New Zealand's (RBNZ) target range.
The data may take the pressure off the RBNZ to tighten
policy much more this year, although another quarter-point hike
next week seems a done deal.
The kiwi dropped on the data to a low of $0.8690,
pulling further away from a recent high of $0.8839 and its
post-float peak of $0.8842 set in August 2011. It last traded
down 0.8 percent at $0.8700.
The kiwi had already felt the effects of a decline in by
international milk prices and a drop in volumes at an auction
held by New Zealand's Fonterra Co-operative Group, the world's
biggest dairy exporter.
U.S. DOLLAR BARELY HOLDING UP
The dollar index was last at 80.442, up about 0.1
percent on the day. The euro was down 0.1 percent at $1.3555
while the greenback was flat at 101.65 yen after
touching a one-week high of 101.77.
"Below the 101 yen figure, there are pure commercial orders
from (Japanese) importers, but the upside is still capped," said
Kaneo Ogino, director at Global-info Co. in Tokyo, a foreign
exchange research firm. "People are just waiting for the next
trigger event," he said.
Fed Chair, Janet Yellen is due to speak later in the day.
Speaking to a Senate committee on Tuesday, she defended the
Fed's loose monetary policy settings, saying the recovery was
not yet complete.
Yellen said early signs of a pick-up in inflation were not
enough for the Fed to accelerate plans for raising interest
rates, but she conceded that this might change if labour markets
improved more quickly than expected.
(additional reporting by Lisa Twaronite; Editing by Larry King)