The dollar remained on the ropes versus its major counterparts Tuesday morning in New York as risk continued to enter markets around the world, giving higher-yielding currencies a boost versus the safe-haven buck.
Stocks have surged of late, and the bulls appeared poised to to run again on Tuesday as Fed Chairman Ben Bernanke prepared to testify on the economic outlook on Capitol Hill.
Bernanke is expected to testify on the improving economy Tuesday morning, but will likely warn that it may be some time before the economy gets back to normal.
Economic data is likely to remain in focus on Tuesday, with the Institute for Supply Management due to release its report on activity in the service sector in the month of April. Economists expect the index of activity in the sector to rise to 42.0 from 40.8 in March.
On Monday, a pair of encouraging economic readings helped fuel speculation that the economy may be in recovery mode. With many first-time buyers taking advantage of historically good housing affordability conditions, the National Association of Realtors released a report showing a notable increase in pending home sales in March.
While green shoots are being seen on a number of fronts, Friday's jobs data could reveal a grim picture of the US employment situation. Economists estimate that the U.S. economy lost 620,000 jobs in April and look for an unemployment rate of 8.9%.
In Tuesday morning's currency moves, the dollar extended its recent losses versus the sterling, slumping to 1.5100 for the first time since January. With the loss, the dollar has fallen about 7 cents in the past 2 weeks, and is more than 16 cents from January's 23-year high near 1.3500.
The pace of decline in UK's construction sector activities slowed notably in April, compared to previous months, reports said Tuesday citing data from the Markit Economics.
The CIPS/Markit construction purchasing managers' index jumped to 38.1 in April from 30.9 in March, marking the highest reading in seven months.
The dollar was once again on the defensive versus the euro Tuesday morning, easing to 1.3400 after seeing some modest strength overnight. The dollar appears ready to test yesterday's monthly low of 1.3436.
Commodities prices have been on the rise, and the dollar has fallen sharply against resource-linked counterparts from Canada and Australia. Versus the loonie Tuesday morning, the dollar continued its steady decline, slipping just below 1.1700 for the first time since last November.
The dollar dropped to a 7-month low of 0.7461 versus the aussie. Tuesday, the Reserve Bank of Australia held its key interest rate unchanged as expected at a 49-year low.
At its meeting, the Board decided to leave the cash rate unchanged at 3% after cutting it by quarter points on April 7.
The dollar held up against the yen, staying near 99 mark in choppy trading. Japanese markets remained closed for public holiday.
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