NEW YORK (AP) — The dollar gained Tuesday as investors pared back bets that the Federal Reserve would announce new measures to keep the economic recovery going.
The Fed is expected to announce Tuesday afternoon that it hold interest rates near record lows near zero to stimulate economic activity. Fed officials, including Chairman Ben Bernanke, have also left the door open to further actions, such as buying government debt, that would continue to drive down rates.
The Fed let such programs, initiated during the financial crisis, to expire earlier this year. The programs took their toll on the dollar due to fears about inflation.
"Many Fed-watchers are playing down the likelihood that the Fed renews its asset purchases," said currency analysts with Brown Brothers Harriman. That's prompting investors who were betting the dollar would keep falling to ease back on their positions, they said.
The dollar has tumbled 6 percent against a basket of six major currencies since the end of May as fears over the European debt crisis receded.
In morning trading in New York Tuesday, the euro fell to $1.3128 from $1.3228 late Monday. The British pound dropped to $1.5735 from $1.5898, while the dollar rose to 86.09 Japanese yen from 85.88 yen.
The dollar also rose to $1.0363 Canadian dollars from 1.0268 Canadian dollars, and gained to 1.0594 Swiss francs from 1.0490 francs.
Also helping the boost the dollar Tuesday were weak data from the U.K. on retail sales and home prices, while France, a major European economy, said its industrial output declined steeply in June.
China said its imports rose 22.7 percent to $116.8 billion last month, down from a 34.1 percent rise in June. China's demand for goods and services has been a major driver of the economic recovery. Importing less from its major trading partners could hurt the rebound in global trade.