The dollar weakened against all major currencies after Federal Reserve Chairman Ben Bernanke reiterated that the central bank is ready to provide additional economic stimulus if needed and investor demand for higher-yielding assets increased.
Earlier the Australian and New Zealand dollars advanced against the greenback after better-than-expected economic data on China. The GDP growth of China, Australia's first largest and New Zealand's second-largest trading partner, rose at an annual pace by 9.5% between April and June, down from 9.7% in the previous quarter. But its data on industrial production (act. 15.1% vs. con.13.2% and prev. 13.3%) and retail sales (act. 17.7% vs. con.17.0% and prev. 16.39) appeared to be well above median forecasts.
The euro also found support from positive data from China’s National Bureau of Statistics as it weighed on haven demand for the dollar and on speculation that China’s foreign exchange reserves had reached a record $3,179bn.
Italian bonds gains for the second day, pushing the yield on the 10-year security down 12 basis points, weakening concern that EU debt crisis may spread to Italy.
US data calendar, including jobless claims, retail sales and PPI, which are all due at 1230GMT.
At 1400GMT, Federal Reserve Chairman Ben Bernanke delivers the semi-annual monetary policy report to the Senate Banking Committee. At the same time, May business inventories are expected to increase 0.9% in May, reflecting the already announced 0.8% increase in factory inventories and the 1.8% increase in wholesale inventories. The weekly EIA Natural Gas Stocks data follows at 1430GMT
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