Dollar Pares Recent Losses Versus Euro Despite Mounting U.S. Woes
The dollar clawed back some of its recent losses against the euro but extended its monthly lows versus the yen on Wednesday.
Traders continued to assess Tuesday’s speech from Federal Reserve Chairman Ben Bernanke, who acknowledged that the U.S. economic has lost momentum.
Bernanke said that he still expected growth to pick up again, and offered no indication that the Fed will extend its expiring quantitative easing program.
The buck improved to $1.4580 versus the euro, after hitting a monthly low of $1.4695 in the previous session. Traders were looking ahead to tomorrow’s interest rate decision from the European Central Bank.
While no change is expected, the markets anticipate Jean-Claude Trichet and company will signal increased vigilance in promoting price stability, meaning an interest rate hike is not far off.
The dollar slumped to Y79.68 versus the yen — its lowest since early May. A drop below 79.55 would take the buck to a level not seen since the immediate aftermath of the March earthquake in Japan.
The buck continued to sit near this week’s record low 0.8326 versus the Swiss franc.
Economic activity has dropped off in several regions of the United States, although the broader economy continued to expand, according to a report issued Wednesday by the Federal Reserve.
The Fed’s most recent Beige Book reflected some slowing in the pace of growth in the New York, Philadelphia, Atlanta, and Chicago districts.