Thursday, February 14, 2008

U.S. Dollar Continues To Fall

NEW YORK, Feb 14 (Reuters) - The dollar fell against the euro and yen on Thursday after Federal Reserve Chairman Ben Bernanke said the U.S. economic outlook had worsened and that the central bank would act as needed to support growth.

In remarks to the Senate Banking Committee, Bernanke said falling home values, a softer job market and high energy prices are expected to hurt consumer spending in the short run.
Bernanke's comments reinforced the impression that the Fed will cut interest rates again, with rate futures pricing in a half-point rate cut in March. The Fed has cut the benchmark rate by 225 basis points in the current easing cycle.

Traders pushed the euro up to $1.4634 , up 0.5 percent from a day ago and close to the $1.4647 session peak.

"Bernanke's comments were in line with his recent rhetoric -- the focus on the downside risk to economy -- and the Fed is going to cut rates again," said Ken Landon, global foreign exchange strategist at J.P. Morgan in New York.

Sterling rose 0.3 percent to $1.9691 while the dollar fell from an earlier one-month high of 108.61 yen to 107.90 yen, down 0.4 percent from late Wednesday.
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