RTTNews - The dollar failed to sustain any direction versus other major currencies Tuesday, extending its monthly lows versus the euro before finding its footing. Meanwhile, the dollar fell sharply against its Japanese counterpart.

Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that the U.S. economy is showing signs of stabilization and that the stimulus authorities have pumped into the global economy probably avoided a collapse of the financial system last year.

He noted that the Fed will likely keep interest rates low for an extended period.

Beginning his regular semi-annual update to Congress, the country's top central banker also warned that the economy is still in a fragile state, with unemployment high and consumer spending shaky.

The dollar fell to a new 6-week low of 1.4276 versus euro, but was able to steady through mid-day. The buck has tanked of late versus the euro, which has been supported by increased risk appetite as stocks improved.

Against the yen, the dollar gave back a big portion of its recent gains, dropping to 93.35 from an overnight level near 94.30.

The Bank of Japan board members all agreed that the Japanese economy had stopped worsening, minutes from the June 15 and 16 monetary policy meeting revealed on Tuesday. Moreover, they agreed that economy was likely to show clear signs of leveling out over time, in line with their projections made in April.

The dollar firmed up a bit versus the sterling, rising to 1.6400 from a 2-week low near 1.6550. Versus the loonie, the dollar slipped to a new monthly low of C$1.0963 before improving by more than a cent.

The Bank of Canada on Tuesday announced that it is maintaining its target for the overnight rate at 1/4 percent, as expected.

The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

The global economy has suffered an intense, synchronous recession and considerable excess supply has opened up, noted the Bank in its accompanying statement. There are now increasing signs that economic activity has begun to expand in many countries in response to monetary and fiscal policy stimulus and measures to stabilize the global financial system.

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