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Stronger dollar hits fresh 4-1/2 year highs vs. yen on Bernanke remarks

Posted: 5/22/2013 12:25:00 PM
Referenced Stocks: - The dollar hit fresh four-and-a-half year highs against the yen on Wednesday following remarks to the U.S. Joint Economic Committee by Federal Reserve Chairman Ben Bernanke.

During U.S. morning trade, the dollar hit its highest level since October 2008 against the yen, with USD/JPY advancing 0.97% to 103.48.

The dollar rallied against the yen after Bernanke said the Fed could potentially slow the pace of asset purchases in the next few meetings.

The euro erased gains against the dollar, with EUR/USD sliding 0.09% to 1.2892, down from session highs of 1.2998 in whipsaw trade.

The euro hit session highs against the dollar earlier after Bernanke said accommodative monetary policy was providing "significant benefits" to the economic recovery and reiterated that the bank's asset purchase program will remain in place for as long as is necessary.

The central bank head said a premature withdrawal of monetary stimulus could lead interest rates to rise temporarily, but also carried a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.

Bernanke said that while conditions in the labor market have shown some recent improvement, long-term employment rates have remained at historic highs and consumer inflation has been low.

The dollar hit fresh seven-week highs against the pound, with GBP/USD dropping 0.71% to 1.5040.

Earlier Wednesday official data showed that U.K. retail sales fell by the most in a year in April, dropping 1.3% from March, increasing the likelihood of more easing from the Bank of England.

Meanwhile, the minutes of the BoE's May meeting showed that three policymakers, including Governor Mervyn King, voted in favor of more easing this month, unchanged from April.

The International Monetary Fund urged Britain's government to do more to stimulate growth in its annual review of U.K. economic policies on Wednesday, and warned that austerity measures are posing headwinds to growth.

The dollar hit nine-month highs against the Swiss franc, with USD/CHF rallying 0.88% 0.9786.

The greenback was sharply higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD tumbling 1.21% to 0.9684, NZD/USD plunging 1.05% to 0.8082 and USD/CAD climbing 0.55% to 1.0324.

The Canadian dollar hit session lows after Statistics Canada said retail sales were flat in March, disappointing expectations for a 0.2% gain, while core retail sales fell 0.2%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.28% to 84.16.

Also Wednesday, a report by the National Association of Realtors said that U.S. existing home sales eased up 0.6% to a seasonally adjusted 4.97 million units in April from March's revised total of 4.94 million.

Analysts had expected U.S. existing home sales to rise 1.4% to 4.99 million units in April.

The Fed was to publish the minutes of its May policy setting meeting later in the session. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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