The US currency was also buoyed by elevated Treasury yields, with investors weighing a potential exit of Jerome Powell from the Federal Reserve (Fed) as President Donald Trump continued his criticism of the central bank chairman.
Currencies showed little reaction to data showing China’s economy grew 5.2% last quarter, slightly topping analysts’ forecasts.
Bitcoin drifted further from yesterday’s all-time peak of US$123,153.22 following a seven-day, 14% surge as investors bet on long-sought legislative policy wins for the cryptocurrency industry this week.
It was changing hands at around US$117,550 as of 5.20am.
The dollar was little changed at ¥147.62, after earlier rising to the highest since June 23 at ¥147.89.
The dollar index, which tracks the currency against the yen, euro and four other major rivals, eased slightly to 98.003, not far below the overnight peak of 98.136, the highest since June 25.
The euro edged up to US$1.1681, after dipping to US$1.1650 yesterday for the first time since June 25.
Fed chair Powell has said he expects inflation to increase this summer as a result of tariffs, which is seen keeping the US central bank on hold until later in the year.
Economists polled by Reuters expect headline inflation to increase to 2.7% on an annual basis, up from 2.4% the prior month. Core inflation is expected to rise to 3.0%, from 2.8%.
“Should inflation fail to materialise or remain steady, questions may arise regarding the Fed’s recent decision not to cut rates, potentially intensifying calls for monetary easing,” James Kniveton, senior corporate FX dealer at Convera, wrote in a client note.
“Calls from the White House for leadership changes at the Fed may increase,” Kniveton said.
Trump on Monday renewed his attacks on Powell, saying interest rates should be at 1% or lower, rather than the 4.25% to 4.50% range the Fed has kept the key rate at so far this year.
Fed funds futures traders have been pricing in about 50 basis points of interest rate cuts by year-end, with the first quarter-point reduction seen as likely in September.
“If Powell leaves, we expect the (US Treasury yield) curve to steepen sharply, with the short-end factoring in front-loaded rates cuts,” DBS analysts wrote in a note.
“Meanwhile, the loss of confidence in price stability should translate into sharply higher 10-year and 30-year yields,” DBS said.
China’s economic growth topped market forecasts in the second quarter – even as it slowed slightly from the prior three months – in a sign of resilience against US tariffs.
At the same time, analysts warned of underlying weakness and rising risks later in the year that will ramp up pressure on Beijing to roll out more stimulus.
The Chinese yuan weakened slightly to 7.1766 per dollar in offshore trading.
The Aussie was steady at US$0.6548.