Forexpros –
Forexpros – The U.S. dollar was broadly higher against its major counterparts Wedneday, after an aggressive liquidity injection by the European Central Bank and Fed Chairman Ben Bernanke stating the bank was prepared to adjust the balance sheet as needed to assist economic recovery.
During U.S. afternoon trade, the dollar was up against the euro, with EUR/USD giving back 0.83% to hit 1.3344.
Kick starting the greenback’s rally, Bernanke stated he expects growth this year to continue “at a pace close to or somewhat above the pace” in the second half of 2011 and added that the bank was prepared to adjust the balance sheet “as appropriate” to support the economic recovery.
The Fed Chief’s words came after reports of the gross domestic product increasing at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
The euro slid against the U.S. dollar earlier upon the ECB’s second long-term liquidity operation meeting with robust demand, bolstering demand for higher yielding assets at the expense of the single currency.
The ECB provided EUR529 billion in three-year loans to European lenders, after receiving bids from 800 banks, significantly more than in the bank’s first long term refinancing operation late last year.
But the greenback was lower against the pound, with GBP/USD adding up 0.23% to hit 1.5939.
In other news, Bank of England Governor Mervyn King dampened expectations for further monetary easing and said the ECB’s liquidity injection has removed the possibility of a bank run in the euro zone.
The greenback was higher against the yen and the Swiss franc, with USD/JPY rising 0.76% to hit 81.08 and USD/CHF soaring 0.87% to hit 0.9034.
Earlier Wednesday, government data revealed a larger-than-forecast increase in Japanese industrial production in January and that output was expected to continue to increase in the coming months.
In Switzerland, a report from the KOF Economic Institute showed that the country’s economic barometer improved slightly in February despite reading negative in January for the first time since 2009.
The greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 0.75% to hit 0.9879, AUD/USD easing up 0.04% to hit 1.0771 and NZD/USD rising 0.11% to hit 0.8386.
Official data showed that Australia’s retail sales rose for the first time in three months in January, gaining 0.3%.
In New Zealand, a report revealed that business confidence rose significantly in February, while buildings consents jumped higher in January, beating estimates.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.68% to hit 78.77.
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