Dollar Strengthens as U.S. Growth Accelerates and Yields Rise

The dollar rose against the euro and yen in New York trading as the Federal Reserve said U.S. growth is accelerating. Ten-year Treasury note yields near the highest in a year also fueled gains for the currency. The beige book, the Fed's anecdotal report on the economy, found ``signs that the pace of economic activity increased a notch during June and the first half of July.'' Reports tomorrow and Friday may show strength in employment and manufacturing, according to a Bloomberg News survey of economists. The dollar strengthened to $1.1349 per euro at 5 p.m. in New York from $1.1442 yesterday. It has gained against the 12-nation European currency in six of the past nine weeks, paring its decline on the year to 7.5 percent. The euro, which reached a record high of $1.1933 in May, ``has probably overshot a bit, just as it undershot two years ago,'' when it fell as low as 83.52 U.S. cents, Niall Fitzgerald, co-chairman of Unilever, the No. 1 maker of household products, said in a televised interview with Bloomberg. The dollar also advanced against the Japanese currency, to 120.25 yen from 119.93. Expectations low interest rates, tax cuts and a weaker dollar are fueling growth may boost the dollar by spurring foreign investors to buy U.S. assets. The U.S. requires about $1.5 billion a day of foreign investment to offset its trade deficit or the dollar will lose value.