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The dollar rose against most of its 16 major counterparts after Federal Reserve Chairman Ben S. Bernanke signaled yesterday that the central bank won’t add to stimulus measures that could erode the value of the currency.
The Fed’s $600 billion program of U.S. debt purchases, its second round of quantitative easing, ends this month.
“We’re seeing dollar strength today because as QE2 ends the Fed has ignored the prospect for QE3, as they said the main reason for doing QE2 was to avoid deflationary pressures, which are no longer an issue,” said Eric Viloria, senior currency strategist at Gain Capital Group LLC in New York.
The euro fell versus the greenback as European Central Bank President Jean-Claude Trichet said the debt crisis threatens to infect banks. Currencies of oil-exporting countries, such as Canada’s dollar, tumbled after the International Energy Agency said it will release oil from emergency stockpiles.
The Swiss franc rose against all of its major peers, reaching a record against the euro, amid concern the global economy will falter.
A report showed European services and manufacturing growth slowed in June more than economists forecast, adding to signs the economy is losing momentum. A composite index based on a survey of euro-area purchasing managers fell to 53.6 from 55.8 in May, London-based Markit Economics said.
Applications for jobless benefits in the U.S. rose 9,000 in the week ended June 18 to 429,000, the Labor Department said today. Purchases of new houses fell in May for the first time in three months, dropping 2.1 percent to a 319,000 annual pace, Commerce Department data showed today in Washington.
The euro dropped amid concern Greek Prime Minister George Papandreou will face difficulty in getting parliamentary approval for budget cuts and asset sales needed to qualify for more aid.
European leaders meet today in Brussels for a two-day summit on Greece. German Chancellor Angela Merkel told reporters they’ll reaffirm a time-line for assistance to Greece hammered out by euro-area finance ministers. The finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment.
Antonis Samaras, leader of the opposition in the Greek parliament, said his party will vote against the government’s new austerity measures, contrary to European Union calls for unity, the Financial Times reported, citing an interview.
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