Falling dollar———
The dollar fell from four-week highs on Monday as Federal Reserve Chairman Ben Bernanke doused expectations the U.S. central bank would raise interest rates anytime soon.
Bernanke said that while the U.S. economy has improved, the recovery remains fragile and the unemployment rate could remain high for some time. In remarks before the Economic Club of Washington, he added that he still sees an “extended period” of low rates.
“Bernanke is emphasizing the weakness and the downside to the U.S. economy,” said Brian Dolan, chief currency strategist, at Forex.com in Bedminster, New Jersey. “Therefore, he’s postponing interest rate hike expectations. He left a very clear impression that rates will remain on hold,”
Upbeat U.S. jobs data last Friday had fueled speculation the Federal Reserve may consider winding down its stimulus measures and start shifting to a tightening bias soon.
After Bernanke’s statements, traders readjusted their interest rate expectations and have squared up their long dollar trades built since Friday.
In early afternoon trading, the ICE Futures’ dollar index .DXY fell 0.5 percent to 75.516 after earlier hitting a more than four-week high at 76.183.
The euro edged up 0.1 percent to $1.4869 after trading lower for most of the session. It rose as high as $1.4883 following Bernanke’s remarks. In earlier trade, it fell to $1.4757, according to Reuters data, its weakest since November 4.
Comeback of the Dollar? ————-
U.S. multinational shippers reliant on quality imports should be heartened by the fact that the dollar was staging a comeback late last week. As our readers know, the currency has been taking a beating for the past seven years – losing about a third of its value compared to other notes.
Granted, such a decline has mitigated the lopsided trade balance, and sustained some short-sighted exporting strategies. But our most valued economists concur that when it comes to long-term globalized trade, a healthy sawbuck is the best incentive for aggressive business-building.
And since the U.S. dollar is the most actively traded currency in the world, its valuation tends to be reflective of the direct outlook for our economy and our monetary policy.
Dollar Strength——-
The dollar has edged slightly away from its highs of the day, but kept most of its recent gains, against major rivals on Monday in New York. The greenback has been experiencing notable strength since Friday’s jobs report.
The U.S. Labor Department revealed that non-farm payrolls dropped by 11,000 last month, much less than expected, sending the dollar surging away from recently-seen lows.
The greenback moved near 1.4820 against the euro, hovering near the monthly high of 1.4755 reached earlier in the morning.
The buck backed off a 10-day high against the pound and traded near 1.6420 in the late morning. The greenback reached a shigh as 1.6312 earlier in the morning.
The dollar edged lower against the yen, moving near 89.63, after hitting a four-week high on Friday.
