The dollar rose against the yen on Tuesday after a Japanese minister clarified remarks about the yen’s drop, but many awaited the Federal Reserve chief’s testimony before adding to bets on a stronger United States currency, Reuters reported.
Speculation the Fed will trim its bond purchases sooner than expected has mounted given signs of an improvement in the US labor market. Chairman Ben Bernanke testifies to Congress on Wednesday and his words will be combed for clues on the timing.
If Bernanke reiterates his ultra-loose monetary policy stance, the dollar could give up some of its gains against most major currencies. However, any hint asset purchases could be wound down later this year would give the dollar index .DXY, which has risen five per cent this year, a huge boost, traders said.
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