The dollar rose against most major currencies on Tuesday after comments from U.S. Federal Reserve Chairman Ben Bernanke eased worries over inflation outlook.
In a semiannual monetary policy testimony to the Congress, Bernanke said outlook for the U.S. economy was improving, while the economy is still fragile and supportive policies would be needed for some time to prevent rising unemployment from undercutting recovery.
All officials of the Federal Open Market Committee (FOMC) expect that inflation will be somewhat lower this year than in recent years, and most expect it to remain subdued over the next two years, Bernanke said.
The FOMC anticipates that economic conditions are likely to warrant maintaining the federal funds rate at exceptionally low levels for an extended period. The present focus of monetary policy remains on stimulating economic activity.
Although an exit strategy from the present highly accommodative monetary stance won't be adopted in some time, Bernanke assured investors that the Fed has prepared such a strategy which it is ready to activate "in a smooth and timely manner" when needed.
Strong quarterly results from Caterpillar, Coca Cola and Dupont boosted market sentiment, lifting
Wall Street. While a profit warning from CIT Group, the largest lender to small and midsized business in U.S., refreshed worries over its bankruptcy.
The euro bought 1.4195 dollars in late New York trading compared with 1.4221 dollars it bought late Monday. The pound fell to 1.6432 dollars from 1.6533 dollars.
The dollar rose slightly to 1.1073 Canadian dollars from 1.1070 Canadian dollars, and fell to 1.0682 Swiss francs from 1.0693 Swiss francs. It fell to 93.63 Japanese yen from 94.23 Japanese yen.