Novas medidas do Governo pressionam contas em 0,6% do PIB

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By Carolyn Cohn

LONDON (Reuters) - The dollar hit its highest level in over two months against the euro, Swiss franc and sterling on Wednesday, extending gains after Federal Reserve Chairman Alan Greenspan was upbeat on U.S. growth in the previous session.

Strong earnings reported in after-hours trade by tech bellwether Intel Corp also fired the dollar, reinforcing the brighter picture painted by Tuesday's strong U.S. consumer spending and regional industry figures.

The dollar pushed as high as $1.1115 to the euro in early trade, extending Tuesday's one percent rally to hit its strongest since April 30.

But the currency eased to $1.1150 per euro by 5:20 a.m. EDT, ahead of further testimony by Greenspan at 10 a.m. EDT.

"The profile that Greenspan presented was of robust U.S. growth, which is in contrast to the euro zone," said Ryan Shea, senior international economist at Bank One

"But the market is a little bit cautious in the short term, as Greenspan has the habit of looking at the market reaction to his first comments, and then finishing them off."

Government bonds sold off sharply after Greenspan told Congress on Tuesday that the U.S. economy "could very well be embarking on a period of extended growth."

U.S. stock markets succumbed to a bout of profit-taking but were set for a strong open on Wednesday after tech giant Intel reported a doubling of its second-quarter net earnings.

U.S. consumer prices for June are also due at 8:30 a.m. EDT, and industrial production data at 9:15 a.m. EDT.

June CPI is forecast to have risen by 0.2 percent after rising 0.3 percent in May, and core CPI, excluding more volatile food and energy items, is forecast to have risen 0.1 percent in June, as it did in May.

U.S. Treasury Secretary John Snow meets British finance minister Gordon Brown in London later on Wednesday.

BOJ NERVES

The dollar also rallied against the yen as talk of yen-selling by Japanese authorities triggered a wave of dollar buying.

The dollar was up 0.35 percent on the day at 118.33 yen, after testing two-week highs near 118.70 in Tokyo, two yen above the previous day's lows.

Traders suspect Japan has intervened on several days in the past week, fearing appreciation in the yen could harm the country's fragile export-led recovery.

The market showed muted reaction to the Bank of Japan upgrading its assessment of the economy for the first time in a year.

HIGH-YIELDERS LOSE

The recent trend of pulling funds out of high-yielding currencies back into the dollar gathered pace after a surprise 25 basis point cut from the Bank of Canada on Tuesday.

The Canadian dollar was trading near nine-week lows beyond C$1.3960 per dollar set on Tuesday.

Better than expected UK employment data, meanwhile, lifted sterling away from earlier three-month lows against the dollar of $1.5859.

UK unemployment unexpectedly fell to a two-year low in the three months to May, according to the ILO measure of joblessness.

"Market participants were getting a bit carried away with talk of rate cuts in August, and this data should help sterling," said Audrey Childe-Freeman, European economist at CIBC World Markets.

Sterling was trading at $1.5912 at 5:50 a.m. EDT, little changed from the U.S. close.

Bundesbank President Ernst Welteke said in an interview with the German Bild newspaper he would not bet on any further euro zone interest rate cuts at the moment, because they would not have any positive economic effect.



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