U.S. dollar rises broadly on interest rate speculation

The U.S. dollar climbed against most majors on Wednesday amid speculation that the Federal Reserve is shifting toward tighter monetary policies.

Disappointing economic reports in Europe and comments on Tuesday and Wednesday by Yellen before Congress suggesting U.S. rate hikes may come sooner than expected were driving dollar purchases, currency strategists said.

Yellen told lawmakers in a Tuesday hearing that interest rates could rise sooner rather than later if the labor market continues to improve, especially given her observations that small-cap, biotech and other momentum stock valuations appear "stretched" these days.

Yellen was set to appear before the House of Representatives later Wednesday, though the dollar seems to have already priced in Fed expectations for rates to rise sooner if the economy improves or remain on hold if slackness persists, while stimulus programs should wrap up around October.

The dollar index, which measures the dollar`s performance against a basket of six other major currencies, was up 0.2 percent to 80.565 after touching its highest level in a month.

Treasury yields, seen as central to the dollar`s appeal in currency markets, were initially higher on Wednesday but later slipped, with the benchmark 10-year U.S. Treasury note up 3/32 in price to yield 2.537 percent after touching a high of 2.57 percent.

The dollar also firmed on the news that U.S. wholesale prices rose more than expected in June. The U.S. producer price index rose by 0.4% in June from May, according to the U.S. Bureau of Labor Statistics, beating market calls for a 0.2% uptick. Core producers prices rose 0.2%, in line with market expectations.

The greenback was up against the Euro, with EUR/USD down 0.32% at 1.35231

The dollar was up against the yen, with USD/JPY up 0.04% at 101.714, and up against the Swiss franc, with USD/CHF up 0.32% at 0.89835.

The greenback was up against the pound, with GBP/USD down 0.03% at 1.71350.