Dollar rallies on Fed tapering bets

The US dollar rallied against major currencies Wednesday as recovery of U.S. economy boosted expectations that the Federal Reserve would continue tapering its monetary stimulus. Manufacturing activity in the New York region expanded at a faster pace in January, with the general business conditions index rising to 12.5, its highest level in more than a year, said the Federal Reserve Bank of New York Wednesday. U.S. Producer Price Index (PPI) for finished goods advanced 0.4 percent in December on a seasonally adjusted basis, the Labor Department reported. The increased PPI put more pressure on the Fed to reduce its monthly bond purchases. Moreover, the U.S. mortgage applications surged 11.9 percent last week, according to the Mortgage Bankers Association. The dollar index, which tracks the greenback against six major currencies, was up 0.25 percent at 80.86 in late New York trading. In the previous session, the dollar snapped a three-day falling spree against major currencies after the Commerce Department said the U.S. retail sales exceeded market forecast to edge up 0.2 percent in December following a downwardly revised 0.4-percent gain in November. The Fed announced the first tapering of its massive monthly asset purchases by 10 billion dollars starting January following its meeting on Dec. 18. Fed officials will meet again on Jan. 28- 29 to discuss the next move of withdrawal from its monetary stimulus. In late New York trading, the euro dipped to 1.3602 dollars from 1.3671 dollars of the previous session, and the British pound decreased to 1.6369 dollars from 1.6434 dollars. The Australian dollar slipped to 0.8909 U.S. dollar from 0.8958 U.S. dollar. The dollar bought 104.61 yen, higher than 104.24 yen of the previous session. The greenback moved up to 0.9088 Swiss francs from 0.9029, and went up to 1.0953 Canadian dollars from 1.0949.