Forex - Dollar gains on safe harbor demand ahead of Bernanke testimony

Shutterstock photo - The dollar rose against most of its peers in U.S. trading on Tuesday, as investors sought safety in the U.S. currency ahead of Federal Reserve Chairman Ben Bernanke's testimony in Congress on Wednesday.

Trading was choppy, with the greenback jumping in and out of positive territory.

In U.S. trading on Tuesday, EUR/USD was up 0.20% at 1.2910.

The dollar moved higher earlier amid a flight to safety ahead of Fed Chairman Ben Bernanke's Wednesday testimony before Congress, as investors remained eager to see if the nation's top central banker hints at when stimulus measures may wind down.

Stimulus measures currently in place, such as the Fed's monthly USD85 billion bond-buying program, weaken the greenback by flooding the economy full of liquidity to keep interest rates low and encourage investing and hiring.

Federal Reserve officials have suggested in public recently that the U.S. central bank may begin to scale back stimulus tools this summer, though some backtracked on such comments, causing uncertainty in markets that made the dollar more attractive due to its safe-haven appeal.

The dollar, however, gave back gains on talk that a decision to scale back stimulus measures in the U.S. will reflect an improving labor market, which enticed investors out of the safety of the greenback, a popular asset to ride out uncertainty.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.67% at 1.5154.

In the U.K. earlier, the Office for National Statistics said the country's consumer price index slowed to an annual rate of 2.4% in April from 2.8% the previous month, missing expectations for a reading of 2.6%.

Month-over-month, consumer price inflation rose 0.2% in April, below expectations for a 0.4% increase, after rising 0.3% in March.

Core CPI, which excludes volatile food and energy costs, came in at 2.0% from 2.4% in March.

Analysts were expecting a 2.3% reading for core inflation prices.

Softer-than-expected inflation rates sparked talk that incoming Bank of England Governor Mark Carney has more room to loosen policy to spur more economic recovery if need be.

The dollar was up against the yen, with USD/JPY up 0.24% at 102.52, and up against the Swiss franc, with USD/CHF trading up 0.31% at 0.9700.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.22% at 1.0266, AUD/USD down 0.01% at 0.9806 and NZD/USD trading down 0.13% at 0.8161.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.02% at 83.92.

On Wednesday, all eyes will be on Bernanke and his appearance in Congress.

Elsewhere, the U.S. is to release data on existing home sales, a leading indicator of economic health, while the Fed is to publish the minutes of its most recent policy-setting meeting. - 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.

Read more News on or Follow us on Twitter at @ Newsinvesting

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

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

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.