The dollar gained after Federal Reserve Chairman Ben S. Bernanke failed to signal new measures to shore up the economy that would risk debasing the greenback.
Bernanke said the central bank still has tools to stimulate the economy without signaling when or whether policy makers might deploy them.
“The key point from the speech was that he didn’t signal any new Federal Reserve easing,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co..
Last year at the conference, Bernanke said the Fed would “do all that it can” to ensure a continuation of the economic recovery and that buying more debt might be warranted if growth slowed. Two months later, policy makers announced a $600 billion second round of asset purchases that ended in June.
The euro pared earlier gains after Commerce Department data showed U.S. gross domestic product grew at a 1% annual rate from April through June, down from a 1.3% prior estimate. The median forecast of economists called for a 1.1% increase.
The global economy has a 50% chance of slipping into recession as the economies of Europe and the U.S. struggle to grow, the Nobel laureate and New York University professor Michael Spence said yesterday.
The dollar has declined 1.4% in the past three months. The euro has appreciated 0.3% and the yen has gained 4.8%.
The yen advanced for the first time in three days versus the dollar as Japan’s Prime Minister Naoto Kan said he was stepping down.
“I feel I’ve done everything I could under these difficult conditions,” Kan told Democratic Party of Japan lawmakers at a nationally televised meeting today.
The Swiss franc weakened against most major counterparts after an index of leading indicators dropped more than economists forecast, adding to signs the currency’s recent strength may be damaging the nation’s growth.
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