Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Dollar slides on Bernanke's testimony

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- The dollar turned lower against the euro, pound and yen Wednesday as investors digested Federal Reserve chairman Ben Bernanke's testimony on monetary policy.

What prices are doing: The dollar slid 0.3% against the euro to $1.35 and edged .04% lower versus the British pound to $1.54. The greenback also slipped against the yen to ¥90.22.

dollar.mkw.gif
Click chart to view current rates.

The dollar was higher against the euro and the pound Tuesday following a report that showed U.S. consumer confidence fell sharply in February, snapping a three-month streak of improvement. The downbeat figures sparked concern over the strength in economic recovery, triggering investors to turn to the buck for its safe haven appeal.

What's moving the market: Fed chairman Ben Bernanke appeared on Capitol Hill Wednesday to begin his two-day semi-annual monetary policy testimony. He warned lawmakers that although government action has launched economic recovery, the sluggish job market is still a concern.

He reiterated that the Fed's benchmark lending rate, which impacts the price of consumer loans, will continue to hold near zero. It has stood near the historic low since December 2008.

Last week, the central bank raised its discount rate, which is what banks pay to borrow directly from the Fed, to 0.75%. The move sparked hopes among investors that the Fed would tighten monetary policy and raise the benchmark rate sooner than expected. That confidence pushed the dollar higher against its rivals.

The dollar also came came under pressure Wednesday when recovery doubts were boosted by a report that showed new home sales plunged in January.

A jittery economy and an excess of foreclosed homes pushed the annual rate of new home sales to 309,000, the lowest level since the government began keeping records in 1963. The drop surprised analysts, who expected sales to surge because of the homebuyer tax credit, which runs through the end of April.

What analysts are saying: "The dollar has fallen across the board in response to Bernanke's initial statements," said Kathy Lien, director of currency research at Global Forex Trading. "The fact that Bernanke is not entirely optimistic about U.S. economic recovery and the fact that he did not telegraph additional tightening proves to be disappointing for dollar bulls."

Lien said the dollar has rallied since the middle of February on the chance that the Fed would be more aggressive than other central banks, but Bernanke's comments suggest that the central bank will not be as aggressive as previously hoped.  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.63%3.68%
15 yr fixed2.76%2.79%
5/1 ARM2.97%2.94%
30 yr refi3.66%3.72%
15 yr refi2.79%2.82%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,891.16 117.52 0.66%
Nasdaq 4,817.59 42.23 0.88%
S&P 500 2,081.43 16.13 0.78%
Treasuries 1.86 0.05 2.53%
Data as of 11:31pm ET
Company Price Change % Change
Bank of America Corp... 14.77 0.21 1.44%
Ford Motor Co 13.62 0.06 0.44%
Apple Inc 93.64 -0.10 -0.11%
Freeport-McMoRan Inc... 13.55 -0.45 -3.21%
Frontier Communicati... 5.44 -0.12 -2.16%
Data as of 4:15pm ET

Sections

Shares of Amazon have been on fire lately. Investors are bullish after the company's latest earnings. Even Warren Buffett is a big fan of Amazon CEO Jeff Bezos -- even though Berkshire Hathaway does not own Amazon stock. More

It's getting worse for Puerto Rico. The island defaulted on $422 million in bonds related to its Government Development Bank on Monday. Congress is currently debating an aid package for the island. More

Tech leaders Apple, Alphabet and Microsoft all disappointed Wall Street with their latest earnings reports. And that's dragged the Nasdaq back near correction territory. Is this the beginning of another huge pullback or an overreaction? More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More