U.S. Dollar Falls vs. Most Major Rivals

The dollar fell against most major currencies Tuesday after the release of a positive manufacturing index in Europe and ahead of Japan's "Golden Week" holidays from Wednesday through Friday.

The euro rose to $1.2630 in afternoon trading in New York, above the $1.2568 it bought in the morning, and up from the $1.2584 the night before in New York.

The dollar fell against the Japanese currency, dropping to 113.11 yen from 113.33 late Monday in New York.

The absence of usual dollar buyers like Japanese import firms and institutional players -- many of whom are already away for the holidays -- contributed to the dollar's declines, traders said. Japanese markets will be closed Wednesday through Friday.

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The British pound rose to $1.8419 from $1.8255 on Monday after the PMI for Britain found that it rose to 54.1 percent last month, up from 51 in March, led in part by increased new orders and output.

The euro's rise came after the manufacturing purchasing managers index for the 12 countries that use the euro rose to 57.1 in April, up from 56.1 in March, its highest reading since September 2000.

Although the country breakdown was mixed, the reading remains consistent with strong increases in manufacturing activity across the area.

That, in turn, is expected to increase hopes that the euro zone's economic growth could see more healthy expansion in the second quarter of 2006 and cause the European Central Bank to lift its key interest from 2.5 percent.

The ECB meets Thursday in Frankfurt, but analysts don't believe a rate increase is forthcoming until June.

After trading in the $1.20 range for months, the euro almost touched $1.27 last week when comments from Fed Chairman Ben Bernanke were interpreted to mean the U.S. central bank was going to soon end its policy of measured interest-rate increases. Higher rates can buoy a currency by making some kinds of investments more attractive.

The euro fell back Monday, however, after cable TV network CNBC reported Bernanke said over the weekend that the Fed was not dovish and that the market "got it wrong," in speculating about the meaning of his testimony before the Joint Economic Committee of Congress. CNBC is a unit of General Electric Co.

Bernanke is scheduled to speak Wednesday at an economic summit in Washington and could use that occasion to further clarify his views, analysts said.

In other trading, the dollar bought 1.2358 Swiss francs, down from 1.2419 late Monday, and 1.1057 Canadian dollars, down from 1.1138.

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