Dollar strengthens on Bernanke comments

AP News
Posted: Jul 14, 2011 3:44 PM
Dollar strengthens on Bernanke comments

The dollar edged up against the euro late Thursday after Federal Reserve Chairman Ben Bernanke told Congress a third round of bond-buying to support the economy isn't imminent.

The head of the U.S. central bank had said on Wednesday that the Fed may resume buying bonds if the economy stagnates. That could keep interest rates low, hurting the dollar's investment appeal. The dollar sank in response.

But in a return trip to Capitol Hill on Thursday, Bernanke told Congress that the Fed is not currently planning any stimulus measures.

Morgan Stanley currency strategist Ron Leven said that "the market started acting like (stimulus) was a done deal" but now recognizes that "apparently there's a high threshold before it would happen."

The euro fell to 1.4135 late Thursday from $1.4151 late Wednesday.

In other trading, the British pound was rose to $1.6127 from 1.6110.

The dollar edged up to 79.11 Japanese yen from 78.99 yen, easing off a four-month low of 78.44 yen earlier in the day. The dollar dropped to 0.8173 Swiss franc from 0.8199, hovering above a record low of 0.8079 Swiss franc set on Wednesday.

The yen and Swiss franc are both considered safe-haven currencies and have been gaining because investors fear that global growth is slowing and are wary of a debt crisis, whether in Europe or the U.S.

Currency trading has been volatile this week because of those debt worries.

Fears that the European debt crisis could spread to Italy or Spain had driven the euro below $1.39 earlier this week.

Moody's warned on Wednesday that it could cut the U.S. debt rating if politicians can't get a deal done on raising the nation's debt limit.

If no deal is reached, the current debt limit could soon constrain government borrowing and its ability to pay its bills.

In other trading, the dollar traded up to 96.04 Canadian cents from 95.88 Canadian cents.