Dollar gains in New York

The dollar gained against the euro and yen on Wednesday as factors ranging from month-end positioning to a European Central Bank cash infusion and lowered expectations of another Federal Reserve bond-buying binge raised the greenback's appeal. Robust US data, which typically increases risk appetite, favoured the dollar versus the euro as it highlighted a growing disparity between the economies on both sides of the Atlantic.
Ongoing financial strains in Europe prompted the ECB to infuse over a half a billion euros into financial markets. "The ECB's auction in some ways could be interpreted as a form of quantitative easing," said Charles St-Arnaud, foreign exchange strategist at Nomura Securities in New York.
"But, today was a day where everyone was a little confused about the euro and there was not any big data out of Europe to trade off," he said. The euro accelerated losses against the dollar to hit a near one-week low. The dollar rose sharply against the yen after Fed Chairman Ben Bernanke told a congressional panel the US unemployment rate had fallen more quickly than expected.
Bernanke offered a tempered view of the US economy and stopped short of signalling further Fed bond purchases, dashing the hopes of some traders in financial markets who were betting on more monetary stimulus. The Fed's two asset-purchase programmes, known as quantitative easing, helped stimulate the economy but hurt the dollar's value as they were tantamount to printing money.
The euro fell as low as $1.3313 and last traded down 1.1 percent at $1.3318. The greenback also rose against the yen, hitting a high of 81.31 before receding to 81.18, still up 0.9 percent for the day. Nevertheless, it has been a strong year so far for the single currency, which has risen 2.9 percent against the dollar and 8.7 percent against the yen. So far this year, the dollar has gained 5.6 percent against the yen.
The European Central Bank loaned 530 billion euros in cheap money on Wednesday, slightly more than analysts had expected for the bank's second long-term refinancing operation. The ECB's move helped riskier currencies earlier in the day, lifting the Australian dollar to a 7-month high against the US dollar, while pushing the New Zealand dollar to a 6-month high and the Canadian dollar a five-month peak against the greenback.