July 17, 2013 / 2:06 PM / 4 years ago

FOREX-Dollar edges higher after Bernanke speech; Q-and-A awaited

* Bernanke: tapering to begin this year, but plan not preset
    * Sterling rises after unanimous vote to keep BoE QE on hold

    By Wanfeng Zhou
    NEW YORK, July 17 (Reuters) - The dollar edged higher
against the euro and yen on Wednesday after Federal Reserve
Chairman Ben Bernanke said the central bank still expects to
begin reducing stimulus this year, but that could change
depending on the economic outlook.
    The market's reaction to Bernanke's prepared semi-annual
statement to Congress was limited as traders said it contained
little new information. Investors will look ahead to a lengthy
question and answer session for more clarity on the Fed's
thinking on winding back stimulus.
    "It's a mixed bag for the dollar," said Joe Manimbo, senior
market analyst at Western Union Business Solutions in
Washington.
    "The fact that the Fed seems likely to taper stimulus this
year should generally see the dollar hold an edge against its
rivals. But the dollar would be susceptible to any downside
surprises to data."
    The euro fell 0.2 percent to $1.3138, but was still
within sight of last week's peak of $1.3201, according to
Reuters data. Initial support was cited at Monday's low of
$1.2993.
    The dollar rose 0.2 percent to 99.33 yen, although it
was still some way off this month's high of 101.53.
    While sticking closely to a time line he first outlined last
month, that the Fed would halt bond buying by mid-2014 when
unemployment is projected to be around 7 percent, Bernanke went
out of his way to stress that nothing was set in stone.
 
    Marc Chandler, global head of currency strategy at Brown
Brothers Harriman, said the short-term market participants are
reading Bernanke's comments "dovishly" as the dollar initially
softened, bond yields eased and the equities moved higher.
    But he added, "as we do not see Bernanke breaking new ground
in his prepared remarks, we would not be surprised to see the
greenback recover."
    The dollar index, which tracks the greenback's 
performance against a basket of major currencies, rose 0.1
percent to 82.559, after hitting a three-week low of 82.342.
    Sterling rallied to a two-week high of $1.5270,
after minutes from the Bank of England meeting surprised markets
when it showed all nine MPC members had voted against expanding
its bond-buying program. 
    This wrong-footed investors who had built large bets against
sterling in recent weeks expecting further policy-easing
signals.

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