European focus: the market awaits US inflation data and Bernanke's speech.[E]

The dollar continued consolidation near local highs versus main currencies at the EU session.

Remind yesterday after strong PPI report USD could climb to a three-month high against the yen and euro. Today the dollar advances on speculation Federal Reserve Chairman Ben S. Bernanke will highlight the risk of inflation and the need for higher interest rates in testimony to Congress today.

The interest rates futures signal 67% bets Fed will make and additional quarter- points rates hike to 5.5% on August 8. Ahead the PPI report such possibility estimated 59%.

He told an American Bankers Association conference in Washington on June 5 that recent inflation figures were «unwelcome» and that he would ensure the trend wasn't sustained.

«Any fresh pessimism about inflation from Bernanke could trigger another move higher for the dollar,» said Ian Gunner, head of foreign-exchange in London at Mellon Financial Corp.

A very important inflation data will be published ahead the Bernanke speech. Analysts assume CPI in June rose on 0.2% showing a slide from the prior data in May when the index firmed 0.4%. The core CPI ex. food and energy will probably go higher on 2.6% in an annual estimations testifying the highest lift since 2002. If data be strong enough the USD can get bullish.