* Dollar buoyant, strong US data lifts UST yields to 7-wk highs
* Aussie awaits RBA’s policy decision for cues
* Focus on whether RBA adopts hawkish message like other c.banks
By Shinichi Saoshiro
TOKYO, July 4 (Reuters) - The dollar stood tall early on Tuesday after upbeat U.S. data boosted Treasury yields to seven-week highs, while the focus turned to the Reserve Bank of Australia’s policy decision to see if it would join a growing list of central banks adopting a hawkish tilt.
The dollar index against a basket of six major currencies was steady at 96.149 after rising 0.6 percent overnight as a stronger-than-expected rise in the June Institute of Supply Management (ISM) national factory activity index propelled the 10-year Treasury yield to seven-week highs.
Monday’s developments helped the dollar index bounce back from a nine-month low of 95.470 plumbed on Friday.
The greenback was hit hard last week as expectations increased that central banks in Europe and Canada would eventually shift to tighter monetary policy.
“The dollar’s latest rise is driven by direct demand, as opposed to the U.S. currency gaining thanks to the weakness of its peers,” said Shin Kadota, a senior strategist at Barclays in Tokyo.
“Expectations towards the Federal Reserve hiking interest rates later this year had perhaps sunk too low. We are now seeing such lowered expectations being reversed a little.”
The euro was up 0.1 percent at $1.1373 after dropping 0.6 percent overnight. The common currency has taken a step back from a near 14-month high of $1.1445 scaled on Friday.
The dollar was steady at 113.360 yen after going as high as 113.480 late on Monday, its strongest since mid-May.
The immediate focus for markets was on the RBA’s policy decision due later in the day.
While the RBA is not expected to hike interest rates this time, market participants are looking for any signs of the central bank joining a shift towards a hawkish stance by peers like the European Central Bank, Bank of England and the Bank of Canada.
The Australian dollar was 0.1 percent higher at $0.7666 . The Aussie had surged to a three-month high of $0.7712 on Friday thanks to a bounce by commodity prices and last week’s broad retreat in the greenback. (Reporting by Shinichi Saoshiro; Editing by Shri Navaratnam)