2009.01.1310:49:00UTC+00Dollar strengthens against majors

The US dollar advanced further against other major currencies on Tuesday morning in New York. The greenback rose to a monthly high against the euro and weekly highs against the pound and the Swiss franc.

Federal Reserve Chairman Ben Bernanke said today that authorities will have to take further action to help pull the country out of the current recession and to continue to stabilize financial markets. Speaking at an event at the London School of Economics, the Fed chief said that action should be focused on helping the financial system, which might require more capital injections by the government into banks. He also repeated the suggestion that the Fed might buy longer-term treasuries.

In economic news from the U.S. Commerce Department, the trade deficit narrowed to $40.4 billion in November from a revised $56.7 billion in October. Economists had expected the deficit to narrow to $51.0 billion from the $57.2 billion originally reported for the previous month.

The greenback advanced to a 33-day high of 1.3190 against the euro by 9:40 am ET, compared to yesterday's close of 1.3362. If the US currency edges up further, it may find a target near the 1.28 level. The euro-buck pair is currently worth 1.3223.

European Central Bank President Jean-Claude Trichet said Eurozone is facing pressing challenges and the economy is expected to face new challenges given the current economic conditions. Speaking at the ceremony of the European Parliament to mark the 10th anniversary of the euro in Strasbourg, Trichet said, "It is no time for complacency."

Against the currencies of the UK and Switzerland, the dollar jumped to a 1-week high of 1.4541 and 1.1253, respectively hit early in the New York session. The greenback is currently trading at 1.4587 against the sterling and 1.12 versus the Swiss franc, compared to Monday's closing values of 1.4824 and 1.1149, respectively.

The latest quarterly economic survey released by the British Chambers of Commerce showed that UK's manufacturing sector's balances for home sales and orders, employment expectations, investment, confidence and cash flow plunged to record lows in the fourth quarter. The manufacturing sector's balance for home sales dropped 25 points to minus 38%, while that for export sales fell 15 points to minus 12%. The employment balance in manufacturing sector slid 17 points to minus 17%.

The greenback rebounded from a 25-day low of 88.80 and hit as high as 89.89 against the Japanese yen by 9:45 am ET Tuesday. The dollar-yen pair that was worth 89.24 at yesterday's close is currently trading at 89.59.

In economic news from Japan, the unadjusted current account surplus for November stood at 581.2 billion yen, the Ministry of Finance said today - down 65.9 percent on year. The surplus was 960.5 billion yen in October and 1.7058 trillion yen in November of 2007. The unadjusted trade balance showed a deficit of 93.4 billion yen following a 145.8 billion yen surplus a month earlier and a 907.6 billion yen surplus a year earlier. Exports were down 26.5 percent on year, marking the largest decline on record, the Ministry said. Imports fell an annual 13.7 percent.

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