The US dollar declined against the European majors on Wednesday morning in Asia as investors remain cautious ahead of a testimony by the Federal Reserve Chairman Ben Bernanke.
Bernanke is set to deliver his semiannual report on the economy today and tomorrow. He is expected to shed light on how soon key U.S. rates may start to rise, after the surprise increase last week in the rate the Fed charges banks for emergency loans.
Most Asian stocks fell today on the back of disappointing U.S. consumer confidence data.
Yesterday, the U.S. Conference Board said its consumer confidence index fell to 46.0 in February from an upwardly revised 56.5 in January. Economists had been expecting the index to edge down to 55.0 from the 55.9 originally reported for the previous month.
Japan’s Nikkei 225 index lost 1.8% in early deals today, Australia’s main index fell 1.2%, South Korea’s Kospi declined 1.1%, Hong Kong’s Hang Seng dipped 0.9%.
The dollar that closed Tuesday’s North American deals at 1.3509 against the euro inched lower to 1.3553 around 9:10 pm ET. If the greenback weakens further, it may test support around the 1.3620 level. Currently, the euro-buck pair is quoted at 1.3545.
The greenback also edged slightly lower to 1.5460 against the pound at this time from Tuesday’s close of 1.5425. The dollar is presently worth 1.5455 per pound with 1.5490 seen as the next target level in near-term.
The US currency that finished Tuesday’s North American trading at 1.0841 against the Swiss franc declined to 1.0808 around 9:10 pm ET and the pair leveled off thereafter. If the greenback ticks down further, it may find near-term support around the 1.0790 level. Currently, the dollar-franc pair is quoted at 1.0813.
Against the Japanese yen, the greenback bounced between 90.1 and 90.3 in early Asian deals on Wednesday. The dollar-yen pair is currently trading near Tuesday’s New York session close of 90.22.
Japan posted merchandise trade balance of 85.2 billion yen in January, the Ministry of Finance said today. That was sharply higher than forecasts that had called for a deficit of 135.8 billion yen following the 545.3 billion yen surplus in December.
Another report showed that Japan’s corporate service prices index declined 1.0 percent to 97.4 on year in January, following a 1.5 percent decline in December to 97.8. On a monthly basis, prices eased 0.4 percent following the flat reading in December.
Looking forward to the European session, trading could be influenced by the reports on German final fourth quarter GDP, imports and exports, German Gfk consumer confidence survey results for March, Italian retail sales and euro-zone industrial new orders-both for the month of December.
Turning to the U.S., markets are likely to react to new home sales data for January.