Dollar hits four-month high ahead of Yellen's testimony

MSCI's measure of stock performance world-wide lifted by expectations of robust global growth

The exterior of the Nasdaq market site in Manhattan. Stocks had a choppy ride yesterday. Shannon Stapleton / Reuters

The dollar hit a four-month high against the yen and global equity markets edged up on Tuesday as investors awaited testimony by Federal Reserve chairman Janet Yellen this week and any signs of tighter U.S. monetary policy.

MSCI's measure of stock performance world-wide initially rose, lifted by expectations of robust global growth.

US stocks had a choppy session, hitting session lows after the US president Donald Trump's eldest son released an email chain related to a meeting with a Russian lawyer linked to the Kremlin during last year's election campaign.

Wall Street was then able to claw back its losses after the senate announced a two-week delay to its August recess in order to work on legislation, giving investors hope the Republican agenda could be advanced.

"It says to me there's a commitment to make some of the changes that the markets would like to see," said Brad McMillan, the chief investment officer for Commonwealth Financial in  Massachusetts.

Europe's main bourses faltered despite a fresh flurry of M&A activity.

The dollar initially edged higher against a basket of currencies before losing ground in the wake of the comments from Mr Trump Jr.

Interest rates are on the rise globally as the Fed is expected to tighten further this year, the Bank of Canada will likely raise rates this week, while comments suggest tighter European Central Bank policy and chatter from the Bank of England.

The Fed board governor Lael Brainard said she believed the US central bank should begin unwinding its balance sheet soon, but she would want to "move cautiously on further increases in the federal funds rate" to help push inflation higher toward its target.

The Philadelphia Fed president Patrick Harker, a voter on the Federal Open Market Committee, also echoed Brainard's sentiment.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.68 per cent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.14 per cent.

The Dow Jones Industrial Average .DJI rose 0.55 points to 21,409.07, the S&P 500 .SPX lost 1.9 points, or 0.08 per cent, to 2,425.53 and the Nasdaq Composite .IXIC added 16.91 points, or 0.27 per cent, to 6,193.31.

The dollar index .DXY fell 0.26 per cent, with the euro EUR= up 0.54 per cent to US$1.146.

The Japanese yen strengthened 0.17 per cent versus the greenback at 113.87 per dollar.

US Treasury yields slipped after the comments from the Fed officials, Benchmark 10-year notes US10YT=RR last rose 4/32 in price to yield 2.3569 percent, from 2.371 per cent late on Monday.

Ms Yellen will deliver her semi-annual monetary policy testimony before the House Financial Services Committee on Wednesday and the senate Banking Committee on Thursday.

Crude oil was higher. Benchmark Brent crude LCOc1 settled up 64 cents to $47.52 a barrel. US light, sweet crude CLc1 also settled 64 cents higher to $45.04.