USD strengthens after Bernanke comments

USD strengthens after Bernanke comments

Story link: USD strengthens after Bernanke comments

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The US dollar strengthened in relation to the euro Wednesday on comments from Federal Reserve Chairman Ben Bernanke that the US government cannot continue to borrow to cover deficits at the rate it is now doing so without hurting the economy in the long run.

Mr. Bernanke’s comments sent investors looking for safe investments, while the greenback was also helped by a news report that central banks in Asia are likely to continue their purchases of US Treasury bills.

The euro, meanwhile, was hurt by new data showing that the Eurozone gross domestic product contracted by 2.5 percent in the first quarter, and by comments from the finance minister of Finland which called for stress tests for banks in the European Union.

Additionally, European producer prices were reported to have dropped 4.6 percent in April from the same time last year, a bit more of a decline than had been expected.

In late morning trade in New York, the dollar traded at $1.419 to the euro while the yen was at ¥135.7599 to the euro and traded at ¥95.67 to the dollar.

The pound weakened after equities markets declined and on a downgrade of US equities markets by Credit Suisse (SWX: CSGN; NYSE: CS) and despite reports of growth in the UK services sector and better consumer sentiment in the UK in May.

At just past 11:30 a.m. in New York the pound traded at 86.53p to the euro while it took $1.6399 or ¥156.8875 to buy a pound.