* Yellen seen open to monetary tightening
* Treasury yields up
* Aussie shrugs off upbeat China GDP (Adds dollar gains in New York open, quotes and latest prices, changes byline and dateline; previous LONDON)
By Michael Connor
NEW YORK, July 16 (Reuters) - The dollar gained on Wednesday on modest rises in U.S. Treasury yields and market speculation Federal Reserve Chair Janet Yellen is leaning toward tightening monetary policy that has kept interest rates at record lows.
The dollar index, a grouping of six currencies traded against the greenback, was up 0.2 percent to 80.556 after touching its highest level in a month.
“We have had some subtly hawkish messages from Janet Yellen,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. “She cracked the door open to potentially earlier U.S. rate rises, and that has really caught the market’s attention.”
America’s top monetary policymaker, Yellen on Tuesday testified to Congress and was scheduled to appear again on Wednesday before lawmakers in Washington.
“The main driver to the dollar has been Yellen’s less-than-dovish comments,” Nordea FX strategist Niels Christensen said.
Treasury yields were higher on Wednesday, with the benchmark 10-year U.S. Treasury note off 2/32 in price and at 2.55 percent after touching a high of 2.56 percent. Those yields were well within a narrow range around 2.60 percent of recent months that currency traders say diminishes the dollar’s appeal.
“Until we get some lift off in U.S. Treasuries yields, the dollar’s gains might prove to be more tenuous,” Manimbo said.
Sterling fell against the dollar to $1.7145, off a nearly six-year high of $1.7192 struck on Tuesday.
The euro was down 0.3 percent at $1.3530, falling to its lowest in one month, while the greenback was slightly higher against the Japanese yen at 101.71 yen after touching a one-week high of 101.79.
The greenback’s gains hurt the Australian and New Zealand dollars, which fell as GDP data raised questions about the fragile economic recovery in China.
A major destination for the two countries’ exports, China reported its economy grew slightly faster than expected in the second quarter. But some investors remain cautious about its prospects for further expansion without another burst of government stimulus.
The Australian dollar shed 0.07 percent to $0.9359 following the Chinese GDP release. 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.
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 kiwi dropped on the data to a low of $0.8691, 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 0.6 percent at $0.8713. (Additional reporting by Anirban Nag and Lisa Twaronite in London; Editing by Catherine Evans and Nick Zieminski)