Forex – Dollar lower after Yellen, loonie close to 13-month highs – The dollar was lower against a currency basket on Thursday after Federal Reserve Chair Janet Yellen reiterated that rate hikes would gradual, while the Canadian dollar was near 13-month highs after its country’s central bank hiked interest rates.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.26% to 95.30 by 03.12 AM ET, close to the nine-month low of 95.22 plumbed in late June.

In testimony before Congress on Wednesday, Yellen said the economy is on a strong enough footing for the Fed to raise rates and begin winding down its massive bond portfolio.

She also emphasized that inflation is below target and noted that it is a particular “uncertainty” that could affect monetary policy.

Investors were looking ahead to Friday’s U.S. inflation figures for June for their potential impact on Fed policy.

The dollar was steady against the yen, with USD/JPY at 113.13 after falling to a one-week low of 112.87 overnight.

The euro pushed higher, with EUR/USD rising 0.32% to 1.1447, moving back towards the 14-month high of 1.1489 set on Wednesday.

The euro has gained ground this month amid speculation that the European Central Bank is moving closer to scaling back its ultra-loose monetary policy.

The Canadian dollar was a touch higher, with USD/CAD at 1.2739, not far from the 13-month low of 1.2679 set on Wednesday after the Bank of Canada hiked interest rates.

It was the first rate increase by the BoC in nearly seven years, making it the first major central bank to join the Fed in tightening monetary policy.

Other commodity linked currencies were also higher, with AUD/USD rising 0.43% to 0.7713 and NZD/USD adding 0.41% to 0.7290.

Meanwhile, sterling was up against the dollar, with GBP/USD advancing 0.4% to 1.2934.