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Dollar pushes higher, more gains seen

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Shutterstock photo - The dollar pushed higher against the other major currencies on Tuesday and looked set to add to recent gains, boosted by expectations that the Federal Reserve will start to unwind stimulus measures as the economy continues to pick up.

During European afternoon trade, the dollar was hovering close to six-week highs against the yen, with USD/JPY up 0.25% to 101.22.

Data last week showing that the U.S. economy added more jobs than expected in June underlined the view that the recovery in the labor market is on track.

Fed Chairman Ben Bernanke said last month the bank could begin tapering its USD85 billion-a-month asset purchase program by the end of 2013 if the economy picks up as the central bank expects.

The euro slipped lower against the dollar, with EUR/USD edging down 0.10% to 1.2857.

Sentiment on the single currency remained fragile after European Central Bank President Mario Draghi reiterated Monday that interest rates will remain at low levels for an extended period of time.

The dollar rose to four month highs against the pound, with GBP/USD falling 0.59% to 1.4860 after official data showed that U.K. manufacturing output fell unexpectedly in May, clouding the economic outlook.

U.K. manufacturing production fell 0.8% in May, compared to expectations for a 0.3% increase. Industrial production in the U.K. was flat, disappointing expectations for a 0.2% increase, and was 2.3% lower on a year-over-year basis.

A separate report showed that the U.K. trade deficit widened to GBP8.49 billion in May, a six month high, from a deficit of GBP8.43 billion in April. Economists had forecast a deficit of GBP8.47 billion.

The dollar extended gains against the Swiss franc, with USD/CHF rising 0.50% to 0.9683.

In Switzerland, official data showed that retail sales rose at an annual rate of 1.8% in May, down sharply from growth of 3.1% in April. Economists had expected Swiss retail sales to rise 1.9% in May.

Elsewhere, the greenback was broadly lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD climbing 0.54% to 0.9180, NZD/USD advancing 0.82% to 0.7864 and USD/CAD down 0.19% to 1.0538.

Earlier Tuesday, official data showed that the annual rate of consumer inflation in China rose more than expected in June.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.12% to 84.53.

Finance ministers from the European Union were to hold talks in Brussels later Tuesday. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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