The yen remained steady following its overnight rally on speculation China will soon announce another revaluation of its currency. The Japanese currency has garnered some support over the last day or two, despite some weak economic data, as the pressure on China to revalue the yuan, particularly from US lawmakers, has intensified. US Senators Charles Schumer and Lindsey Graham have told the new US Treasury Secretary Henry Paulson that they would demand a vote on legislation for steep US tariffs on Chinese goods by Sept 30 if the Chinese yuan has not moved significantly. "With pressure from the US Congress for China to give more ground intensifying, speculation that another set-piece revaluation is rife," said Steve Pearson, currency strategist at HBOS. In addition, the monetary authorities in Beijing appear to be growing concerned about the level of economic growth in China. A government think-tank predicted third quarter annualised growth of 11 pct. If China does revalue, most currency watchers expect the same sort of reaction as occurred last July when China abandoned the yuan's peg with the dollar, and linked the currency to a basket of currencies. The step was widely seen as a political move by China aimed at appeasing trading partners like the US and was widely praised by governments and economists as the "first step" toward greater flexibility in China's forex regime. As expected, the revaluation of the yuan raised the value of Asian currencies, including the yen, against the dollar. But not much has happened since, fuelling disappointment in the US, in particular, which is experiencing a record trade shortfall with the Chinese. Elsewhere, the dollar will be in focus this afternoon when the Commerce Department publishes its first estimate for second quarter US GDP growth, with the data likely to have a major impact on whether the US Federal Reserve raises interest rates again in this cycle in August. Wall Street economists are anticipating a slowdown in the annualised rate of growth to 3.1 pct from the heady 5.6 pct recorded in the first quarter. "If growth is 3.0 pct or less then the expectations for a pause would increase, the dollar would decline and the next crucial economic figure would be the July employment report a week from today," said Michael Carey, senior forex strategist at Calyon. The dollar was particularly weak yesterday after the Fed's Beige Book report into the US economy fuelled speculation that the central bank will not be raising interest rates again in August. The Fed, which has raised its key Fed funds rate a quarter point on 17 consecutive occasions to 5.25 pct, said growth in the US was moderating at the same time as wage pressures remained benign. Following the publication, the market reined back its expectations of another rate hike at the Aug 8 meeting of the rate-setting Federal Open Market Committee. Interest rate markets are now pricing in around a 43 pct chance of a hike against 57 pct before the Beige Book's release. "The dollar will face increasing headwinds from the cyclical side as US rates top out and signs of a slowing US economy become more widespread," said Hans Redeker, BNP Paribas' global head of forex strategy. Yield differentials are really starting to work against the dollar especially as the European Central Bank and the Bank of Japan are poised to tighten policy further over the months ahead.