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Monday, 16 July 2012
Dollar Remains Lower Before Bernanke Senate Testimony
By Masaki Kondo and Kristine Aquino - Jul 17, 2012 4:32 AM GMT+0400
The dollar remained lower following a decline yesterday against the most of its major peers amid speculation Federal Reserve Chairman Ben S. Bernanke will hint at further monetary easing at testimony before Congress today.
The greenback maintained a three-day decline versus the yen after an unexpected drop in U.S. retail sales rekindled speculation the Fed will introduce additional steps to support the world’s largest economy. The euro was 0.2 percent from the lowest in more than three years against the pound before German data that may signal deteriorating confidence among investors.
U.S. retail sales fell for a third month in June, declining 0.5 percent, Commerce Department figures showed yesterday. Photographer: David Paul Morris/Bloomberg
July 16 (Bloomberg) – Christopher Zook, chairman and chief investment officer at CAZ Investments, and Michelle Girard, senior U.S. economist at RBS Securities Inc., talk about the U.S. economy and markets, and investment strategy. They speak with Adam Johnson and Alix Steele on Bloomberg Television’s “Street Smart.” Neil Grossman, managing partner at TKNG Capital Partners, also speaks. (Source: Bloomberg)
“There is market positioning for Bernanke to deliver something today,” said Joseph Capurso, a strategist in Sydney atCommonwealth Bank of Australia (CBA), the nation’s biggest lender. “There is a high risk of more policy easing before the end of this year.”
The dollar was at 78.86 yen as of 9:28 a.m. in Tokyo after losing 1.1 percent in the past three sessions to 78.87. It was little changed at $1.2278 per euro. The 17-nation currency fetched 96.82 yen from 96.80. The euro was at 78.51 pence after touching 78.32 yesterday, the lowest since October 2008.
Bernanke will deliver his semiannual report on the economy and monetary policy. He will testify to the House Financial Services Committee tomorrow.
A Labor Department report may show today that the U.S. consumer-price index was little changed last month from May when it slid 0.3 percent, according to the median estimate of economists surveyed by Bloomberg News. U.S. retail sales fell 0.5 percent in June, Commerce Department figures showed yesterday, whereas economists had forecast a 0.2 percent gain.
“If we don’t see continued improvement in the labor market, we’ll be prepared to take additional steps if appropriate,” Bernanke said on June 20. “Additional asset purchases would be among the things that we would certainly consider.”
The Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing from 2008 to 2011, seeking to cap borrowing costs and stimulate the economy. Last month, it expanded the program known as Operation Twist that replaces short-term Treasuries in its portfolio with longer-term debt.
The ZEW Center for European Economic Research may say today that its index of German investor and analyst expectations slid to minus 20 this month, the lowest since January, from minus 16.9 in June, the median estimate of economists shows. The gauge aims to predict economic developments six months in advance.
The euro has fallen 3.7 percent in the past three months, the worst performer along with the Swiss franc among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The yen was the biggest winner with a 6.6 percent jump, followed by a 3.7 percent advance in the dollar.
“The euro will remain on a downtrend in the medium to long term,” said Yuki Sakasai, a currency strategist at Barclays Plc in New York. “Compared with the U.S., the euro region’s economy has more scope for monetary easing and is more prone to downside risks.”