SYDNEY (Reuters) - The dollar held near one-month highs against a basket of major currencies early on Tuesday, having remained bid in a session made sluggish by public holidays in the United States and Britain.
The dollar index .DXY last traded at 96.381, not far from a high of 96.475 set late in the Asian session on Monday, when dollar bulls were still cheering comments from Federal Reserve Chair Janet Yellen.
In a highly anticipated speech on Friday, Yellen made clear the central bank was poised to raise interest rates this year. She said recent softness in economic data was largely due to “transitory factors” including a harsh winter and labor disputes on West Coast ports.
“The central scenario still points to a September lift-off,” analysts at ANZ wrote in a note to clients.
“That leaves the USD bulls marginally with the upper hand; we say marginally because markets are already largely expecting the same and you need something additional to trigger fresh momentum.”
Yet, Yellen was quick to stress that incoming economic data will be vital in determining the pace of the tightening process.
Hammering home that point, Fed Vice Chair Stanley Fischer on Monday said the process of returning to more normal levels of interest rates will take a few years.
Still, the Fed is a long way ahead in the process of normalizing policy compared with the European Central Bank and Bank of Japan, which have ultra-loose policies firmly in place.
The ECB's stance, along with ongoing worries about Greece, should keep the euro pressured against the greenback, traders said. The common currency last stood at $1.0979 EUR=, having in the last few days retreated from a high of $1.1468.
The Greek government, still trying to reach an agreement with its lenders to unlock fresh loans, said it needed aid urgently in order to make good on its debt obligations.
Against the yen, the dollar bought 121.55 JPY=, having scaled a two-month peak of 121.78 on Monday. In contrast, the euro wallowed at three-week lows. It was last at 133.45 yen EURJPY=R, not far from Monday's trough of 133.27.
The greenback held its ground versus commodity currencies such as the Australian dollar, which hovered just above a three-week low of $0.7804 AUD=D4 set on Monday.
With little in the way of major economic releases in Asia on Tuesday, chances are high that the currency market will remain sluggish until the flow of U.S. data resumes. Durable goods orders will be among those on offer. ECONUS