The dollar rose against most major currencies on Thursday on comments from top central bankers in Europe and the U.S.
European Central Bank President Jean-Claude Trichet said early Thursday that the region's economy is "subject to particularly high uncertainty and intensified downside risk." He said the bank's governors had left its benchmark refinancing rate unchanged.
Trichet's comments suggested that the bank will stop increasing interest rates for now. That pushed the euro to a two-month low against the dollar. Low rates can make a currency less attractive to investors.
In the afternoon, Federal Reserve Chairman Ben Bernanke said he's surprised by the weakness of consumer spending since the recession ended. He offered no new details about possible steps by the Fed to reinvigorate the struggling U.S. economy.
Bernanke's cautious tone and lack of specifics helped lift the dollar against the Japanese yen, Canadian dollar and Norwegian Krone.
The Fed is considering steps that would make the dollar less attractive by increasing the money supply. If Bernanke had hinted at actions such as a fresh round of bond-buying, the dollar likely would have lost value.
Instead, the dollar rose against a basket of six major currencies, reaching the highest point since mid-March. By that measure, the dollar has risen 4.5 percent since the beginning of May. Investors sought the dollar's relative safety during a broad stock market sell-off triggered by worries about a slowdown in global growth and a deepening European debt crisis.
In late trading, the euro fell to $1.3876 from $1.4093 late Wednesday. It fell as low as $1.3836 on July 12.
The ECB has raised its benchmark interest rate twice since April to stave off inflation. The euro's value decreased this summer because of the possibility that an indebted European nation might default on its debt.
Higher interest rates can also stymie economic growth by increasing borrowing costs and slowing the flow of credit to consumers and companies. The European Union economy grew at a sluggish 0.2 percent rate in the second quarter. Further rate increases might risk tipping it back into recession.
Investors often are attracted to currencies from nations with higher interest rates because the higher rates increase their income from currency bets. However, when the economic outlook darkens, they rush into currencies that are seen as safe, such as the dollar and Swiss franc.
In other trading, the British pound fell to $1.5960 from $1.5980. The Swiss franc soared to 87.51 cents from 85.8 cents.
The dollar rose to 77.54 Japanese yen from 77.25 late Wednesday.
bu dalai lama michael buble michael buble anthony sowell anthony sowell rasputin
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