The dollar tumbled versus the euro on Tuesday, after Federal Reserve Chairman Ben Bernanke assured that the central bank intends to keep interest rates near zero despite January’s strong jobs report.
Instead of taking a victory lap for his role in jump-starting the sluggish jobs market, Bernake told a Senate committee that the pace of progress was frustratingly slow, and that the economy required continued support from the Fed.
The dollar dropped to $1.3260 versus the euro, down more than a penny from its overnight highs. With the loss, the dollar dropped to its lowest since December 11 versus the resilient euro.
Meanwhile, Greek officials raced to negotiate a voluntary restructuring on sovereign debt that would help avoid a potentially nasty default.
Unions are on strike in Greece today, with Prime Minister Lucas Papademos struggling to get his political coalition to go along with another round of job cuts.
The dollar dropped to $1.59 versus the sterling, its lowest since November.
On the other hand, the dollar kept most of this week’s gains versus the yen, improving to Y76.90.
German industrial production declined unexpectedly in December, data from the Federal Ministry of Economy and Technology revealed Tuesday.
Production dipped 2.9 percent from November, when it remained flat. Economists were expecting it to show nil growth as seen in the prior month.
The squeeze on consumer spending in the United Kingdom is likely to ease further in early months of 2012, as the latest car sales figures signaled, and help the economy recover from fourth quarter’s contraction and avoid a recession, Howard Archer, chief European and UK economist at IHS Global Insight, said in a note Monday.