The dollar made headway against major currencies on Tuesday after Federal Reserve Chief Ben Bernanke assured markets that the central bank would keep its bond-buying programme in place.

There had been concern that the Fed would wind down its $85bn per month bond-buying programme or stop it earlier than expected. However in his testimony to the US on Tuesday, Bernanke robustly defended the benefits of the programme on the US economy.

"We do not see the potential costs of the increased risk taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery. Inflation is currently subdued and inflation expectations appear well anchored."

The dollar index, which measures the US unit against six other currencies, rose to an intra-day high of 81.948 before later trading at 81.852 compared to 81.766 on Monday.

Meanwhile the euro was dogged by uncertainty surrounding the Italian elections after no political group secured a clear majority in parliament. The results also showed voters had favoured anti-austerity parties, sparking concern about how the government will push through reforms aimed at tackling its budget.

The single currency plunged to a seven week low against the greenback before later trading flat at $1.3058, hardly changed from Monday's session.

Against the yen, the dollar changed hands at ¥91.88 compared to ¥91.83 on Monday.

Sterling traded at $1.5128 versus $1.5161 on Monday.



CJ

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