Forex: Greenback higher on dashed U.S. stimulus hopes

Investing.com - The U.S. dollar traded up against the other major currencies  Tuesday, after Federal Reserve Chairman Ben Bernanke stopped short of indicating whether the U.S. central bank is considering a fresh round of easing, bolstering dollar demand.

During U.S. morning trade, the dollar was higher against the euro, with EUR/USD down 0.21% to 1.2247..

In keenly awaited testimony to the U.S. Senate, Bernanke delivered a negative assessment of the outlook for the U.S. economy, saying growth had lost momentum in the first half of the year and added that efforts to reduce the U.S. unemployment rate were progressing “frustratingly” slowly.

However, he refrained from indicating whether the Fed would embark on a third round of quantitative easing to stimulate the economy, but reiterated that the central bank was prepared to take further action to support the economic recovery, if necessary.

In the euro zone, Spain saw short-term borrowing costs fall at an auction of 12 and 18-month government bonds earlier, but the yield on the country’s 10-year bonds was at 6.76%, remaining close to the critical 7% threshold amid sustained concerns over the country’s finances.

The greenback also pushed higher against the pound, with GBP/USD losing 0.11% to trade at 1.5619.

Earlier Tuesday, official data showed that consumer price inflation in the U.K. rose at the slowest pace since November 2009 in June, rising 2.4% year-on-year after a 2.8% increase in May.

The unexpectedly weak data fuelled expectations that the Bank of England is unlikely to exit its monetary easing policy in the near term, after the central bank increased the size of its asset purchase program earlier this month.

Elsewhere, the greenback was higher against the yen and the Swiss franc, with USD/JPY adding 0.31% to trade at 79.10 and USD/CHF rising 0.23% to 0.9810.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD  down 0.10% to 1.0140,AUD/USD higher by0.34% to 1.0284 and NZD/USD down 0.52% to 0.7938.

The Bank of Canada left its benchmark interest rate unchanged at 1.00% in a widely expected decision earlier and maintained a hawkish stance in its rate statement, saying “some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.” 

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, climbed 0.20% to 83.39.