USA dollar closes higher on Taipei forex

Fed: Yellen was hospitalized for a few days, returning this week

The Australian dollar inched up 0.2 percent to $0.7619 as the greenback's broader advance slowed.

With US yields free to rise, the spread between 10-year Treasury and JGB yields is the widest it has been in about two months, contributing to the dollar's strength against the yen.

Stainless steel ingredient nickel, however, gained after Chinese steel prices reached their highest in 3-1/2 years.

The market was looking ahead to Wednesday and Thursday as Yellen will deliver two days of testimony on the US central bank's semi-annual report on monetary policy and the economy.

USA stock futures also firmed, suggesting Wall Street shares could extend gains made after the U.S. jobs data.

"Looking ahead, we think improving corporate earnings are the key ingredient needed to sustain the equity bull market", said Bob Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management Llc.

Forecasters are divided on whether the central bank will raise rates but data from the overnight index swaps market shows that money markets are nearly fully priced for an increase, while an 80 per cent chance of a second hike has been implied by December.

The Bank of Canada, which meets Wednesday, is widely expected to raise interest rates after strong signals in speeches for such action over the past month.

The ICE Dollar Index, which measures the dollar against a basket of six currencies, was 0.1% higher, at 96.13. Still, beyond that level, the pair could see much greater resistance unless USA growth and inflation improves materially suggesting that further tightening could take place next year.

"By contrast, the Bank of Japan is nowhere near a policy exit, and it's taking steps that weaken the yen", he said. The euro slipped to $1.1395 from $1.1400.

The Group of 20 meeting in Hamburg over the weekend did not have much impact on markets on Monday.

Dollar bulls are banking on Yellen to retain her hawkish stance, emboldened by last Friday's relatively robust USA non-farm jobs report."The main focus is whether Yellen makes it clear in Congress that the Fed intends to begin winding down quantitative easing". That appeared to weigh on the company's shares, which slid 66 cents, or 0.7 percent, to $113.61.

Bond markets, hit hard by jitters about tighter central bank policies in the past two weeks, were stable on Monday.

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