(RTTNews) - In early deals on Tuesday, the dollar strengthened against its European and Swiss counterparts as the world stocks slipped today and oil and gold fell as investors locked in gains from a strong rally.
Meanwhile, the dollar recovered from a new multi-week low against the yen, but it declined against the pound.
Expectations that the Federal Reserve would keep interest rates near zero for some time had been weighing on the dollar, fuelling gains in dollar-priced raw materials and related commodity shares.
Fed Chairman Ben S. Bernanke said yesterday in New York that the central bank "will help ensure that the dollar is strong and a source of global financial stability."
Economic "headwinds" of weak lending and labor markets will probably restrain the pace of the U.S. economic recovery, warranting a continuation of low borrowing costs, he said.
The dollar, which closed yesterday's trading at 1.4974 against the euro strengthened to 1.4916 in early deals on Tuesday. The near term resistance for the dollar is seen at 1.483.
Eurozone unadjusted trade surplus stood at EUR 3.7 billion in September, up from a deficit of EUR 2.3 billion in August, revised from EUR 4 billion deficit reported initially, a report from the Eurostat showed today. A year ago, the trade deficit was EUR 6 billion.
During early trading on Tuesday, the dollar climbed to 1.0135 against the Swiss franc. This may be compared to yesterday's close of 1.0078. On the upside, 1.019 is seen as the next target level for the dollar.
The Federal Statistical Office said Switzerland's real retail trade turnover declined 1.6% in September from the corresponding month of the previous year. Sales were down 1% in August, following July's 1% increase.
At 4:30 am ET Tuesday, the dollar touched a low of 1.6875 against the pound, compared to Asian session high of 1.680. If the dollar weakens further, it may target a multi-month low of 1.6880. At yesterday's close, the pound-dollar pair was quoted at 1.6829.
UK annual inflation rose to 1.5% in October from 1.1% in September, according to a report released by the Office for National Statistics. Annual inflation accelerated for the first time since February 2009 and stood slightly above the expected rate of 1.4%. On a monthly basis, consumer prices were up 0.2%, faster than the 0.1% expected.
The dollar that bounced between 88.93 and 89.18 against the yen in early Asian trading on Tuesday moved off the range at 2:35 am ET. At 3:25 am ET, the dollar-yen pair hit a new multi-week low of 88.75. But the dollar bounced back thereafter and the pair is currently trading near Monday's close of 89.09. The next upside target level for the pair is seen at 89.6.
