Dollar Index Within 1% of Highest in Two Years Before Bernanke
The Dollar Index traded within 1 percent of a two-year high before Federal Reserve Chairman Ben S. Bernanke testifies to Congress for a second day, after refraining from discussing specific stimulus measures yesterday.
The yen and the dollar strengthened against most of their 16 major peers as Asian stocks and U.S. index futures fell. Bernanke speaks to the House Financial Services Committee today after addressing the Senate Banking Committee yesterday. The pound snapped a three-day gain versus the dollar before the Bank of England releases minutes from its last decision on interest rates and the asset-buying program. Australia’s dollar rose to an almost two-week high versus the greenback.
“There was disappointment because of Bernanke,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We saw the market very optimistic going into the Bernanke speech, therefore it was opening itself up for disappointment.”
The Dollar Index, which tracks the U.S. currency against those of six trading partners, was little changed at 83.061 at 8:54 a.m. London time. It reached 83.829 on July 12, the highest level since July 13, 2010. The greenback appreciated about 0.1 percent to $1.2284 per euro, and was unchanged versus the yen at 79.06. The euro weakened almost 0.1 percent against the Japanese currency to 97.12.
Euro-dollar “is a battle of two weakened currencies,” Foley said.
A report from the Commerce Department today may show housing starts climbed to a 745,000 annual pace last month from 708,000 in May, according to the median estimate in a Bloomberg News survey of economists.
Central bank policy makers “are looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market,” Bernanke said in response to questions during yesterday’s testimony in Washington. The Federal Open Market Committee is scheduled to start a two-day policy meeting on July 31.
The pound slipped about 0.1 percent to $1.5640, while the Aussie, as the Australian currency is called, climbed as high as $1.0326, the most since July 5.
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