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The dollar fell for a third day against the currencies of major U.S. trade partners as Federal Reserve Chairman Ben S. Bernanke said the unemployment rate is likely to remain high “for some time.”
The euro extended an advance, rising against all of its 16 most-traded counterparts, as Bernanke told the House Budget Committee that high U.S. unemployment will persist even after the biggest two-month drop in the jobless rate since 1958.
“Although the growth rate of economic activity appears likely to pick up this year, the unemployment rate probably will remain elevated for some time,” the Fed chief testified. “With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” he said.
Bernanke and the policy-setting Federal Open Market Committee are waiting for further proof of a durable pickup in the job market as they press forward with their plan to buy $600 billion in Treasury securities to spur the pace of recovery. In a Jan. 26 statement, policy makers said the recovery “has been insufficient to bring about a significant improvement in labor market conditions.”
U.S. unemployment dropped to 9% last month, the lowest level since April 2009, a report showed on Feb. 4. It fell to 9.4% in December, from 9.8% in November.
"His general tone seems to be quite dovish,” said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York. “The market is getting used to the idea that even with the improvement in the U.S. data, the Fed’s going to be very slow to respond with tightening and therefore the dollar is not going to be that responsive to strong economic data.”
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