Dollar near three-month highs

The dollar hovered near three-month highs against the euro and the yen on Wednesday before comments from Federal Reserve Chairman Ben Bernanke that may provide clues about whether US interest rates will keep rising.
The market also awaited US consumer price data for June to see if inflation risks could prompt the Fed to raise rates again, after data on Tuesday showed a hefty rise in producer prices in the same month.
Traders said bubbling expectations that the Fed could lift rates for an 18th straight time to 5.5 percent next month would keep supporting the dollar, along with flows into the currency as tensions in the Middle East escalate.
Fed funds futures indicate a roughly 50 percent chance of a rate rise next month.
Dealers said the dollar was also supported as the conflict between Israel and Lebanon-based Hizbollah continued to prompt investors to sell-off riskier overseas assets and convert the cash into the US currency.
The euro inched down to $1.2495, just off the three-month low of $1.2473 touched on electronic trading platform EBS on Tuesday. The dollar hovered around 117.35 yen, not far from the three-month peak of 117.59 yen marked on EBS in the previous session.
The Swiss franc was at 1.2535 per dollar, near 1.2557 hit on Tuesday, its weakest since late April. The euro was little changed at 146.70 yen. It struck a record high of 147.42 yen at the start of the month.
Traders said that so long as the Fed continues to hike rates, the market's focus would remain on the dollar's rate advantage over other currencies, particularly the yen.
The yen has fallen more than 3.5 percent against the dollar since the start of last week, brushing off the Bank of Japan's first rate rise in six years to 0.25 percent on Friday.
Despite an end to the BoJ's zero-rate policy, which had driven Japanese investors to higher-yielding assets overseas, the central bank emphasised that rates would rise slowly, suggesting domestic rates have a long way yet to catch up to those in the United States.
Meanwhile, the European Central Bank is poised to boost rates to 3 percent next month. European rates have risen from 2 percent in December, helping to drive the euro/yen to the record high.