The dollar rose to its highest in over two months against the euro, Swiss franc and sterling today, extending gains after Federal Reserve chairman Mr Alan Greenspan delivered an upbeat message on US growth prospects.
Strong earnings from tech bellwether Intel, reported after the US stock exchange closed, also fired the dollar, reinforcing the brighter picture painted by yesterday's strong US consumer spending and regional industry figures.
The dollar pushed as high as $1.1115 to the euro in early trade, extending yesterday's one per cent rally to hit its strongest level since April 30th.
"We are seeing follow-through from Greenspan after his uncharacteristically upbeat comments on the economy," said Mr Mitul Kotecha, global head of foreign exchange research at Credit Agricole Indosuez.
"Greenspan's upbeat outlook and positive earnings releases provide fuel for an ongoing shift out of bonds and into equities, which is positive for the dollar."
Government bonds sold off sharply after Mr Greenspan told the US Congress yesterday that the US economy "could very well be embarking on a period of extended growth".
US stock markets succumbed to a bout of profit-taking but are set for a strong open today after Intel reported a doubling of its second-quarter net earnings.