Dollar dips on Bernanke comments
Hong Kong, December 8, 2009
The dollar dipped on Tuesday after Federal Reserve chairman Ben Bernanke dampened speculation of an early US interest rate rise, while shares faltered on renewed concern about the strength of the global recovery.
The dollar edged down 0.2 percent against a basket of major currencies after Bernanke said the US economy faced 'formidable headwinds' including tight credit conditions, cooling expectations for an early rate rise which were prompted by promising US jobs data on Friday.
The Fed was sticking to a pledge to keep rates at exceptionally low levels for an 'extended period', Bernanke said.
Asian shares weakened as investors were both relieved that the United States was not about to accelerate an upturn in the global interest rate cycle, but concerned about the outlook for the world's biggest economy and Asia's leading export market.
Japan's Nikkei slid 0.5 percent after hitting a six-week closing high on Monday, as investors took profits on shares of exporters and as trading house stocks lost ground after metal prices fell on Monday.
'The selling is a combination of the slightly stronger yen and the speed with which the Nikkei rose over the last six days, making it only natural for the market to take a bit of a breather today,' said Takashi Ushio, head of the investment strategy division at Marusan Securities in Tokyo.
Markets were little fazed by news that the government had finalized a 7.2 trillion yen ($80.6 billion) stimulus package, slightly more than its original plan.
The government also said it was closely watching exchange rate movements as the yen edged up to 89.05 to the dollar from 89.53 late in New York trade.
A lacklustre performance by Wall Street also made Asian investors cautious as the Dow Jones gave up early gains after Bernanke's comments and ended flat. - Reuters