Dollar Declines As Bernanke Points to Economic Uncertainty
The dollar extended losses against the yen on Wednesday, in line with the U.S. stock market's broad weakness, after Federal Reserve Chairman Ben Bernanke said U.S. economic uncertainty has increased.
In remarks to Congress, Bernanke said near-term prospects for the U.S. housing market are uncertain and that developments in the subprime mortgage sector have raised more questions.
Traders said Bernanke's speech was balanced overall, citing upside risks to inflation while also noting the U.S. economy's downside potential.
"Bernanke's comments were a bit of a mixed bag. On one hand, he said their primary concern remains the fight against the inflation, but on the other hand, he is expressing worries with the economic outlook,' said Omer Esiner, market analyst at Ruesch International in Washington, DC.
"So in the end, he have something for the dollar bears and something for the dollar bulls," he added.
Earlier in the session, the dollar sold off after U.S. data showed new orders for U.S. durable goods came in lower than expected, boosting chances of Federal Reserve interest rate cuts this year.
Implied prospects for the Fed to cut interest rates by the end of June