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On Monday the dollar fell to its lowest since November on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus.
The euro rose against the dollar on speculation European Central Bank President Jean-Claude Trichet may indicate this week a readiness to increase borrowing costs.
“The euro more so than any other currency has been driven by fiscal policy divergence as of late,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. “Anything that is the status-quo from Bernanke is probably favorable for the euro. Currencies will be volatile this week trading off rhetoric.”
U.S. consumer spending rose less than forecast in January, accelerating 0.2%, data from the Commerce Department showed today. Another report showed European inflation stayed above the ECB’s 2% target for a second month in January.
An ECB governing council member, Mario Draghi, said on Feb. 26 that inflation pressures are forcing policy makers to focus more closely on the timing of future interest-rate increases.
The ECB, which has kept its key interest rate at 1% since May 2009, will hold its next policy meeting on March 3.
Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy tomorrow to the Senate Banking Committee and is due to testify to the House Financial Services Committee the following day. The Fed has kept its benchmark interest rate at zero to 0.25% since December 2008.
Crude oil for April delivery rose as much 2.1% to $99.96 a barrel in New York before trading at $97.88. It rose last week to $103.41, the highest level since September 2008.
Canada’s dollar reached a three-year high versus the greenback after a government report showed the nation’s economy grew at a 3.3% annual pace in the fourth quarter, more than economists forecast.
The currency was headed for a 2.7% rally this month before tomorrow’s meeting of the Bank of Canada, which has expressed concern that its strength may stall growth.
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