Dollar defensive ahead of Fed statement

Published: 17 Jul at 9 AM Tags: Euro, Dollar,

The dollar remains on the defensive as chairman of the Federal Reserve, Ben Bernanke, prepares to face Congress. The US central bank boss has appeared more dovish than many analysts expected and the dollar index is still at a near three-week low. The euro is also below last week’s high of $1.3208 at $1.3150.

The poorly performing dollar is once again below the 100 yen mark after peaking earlier in the month at 101.53. The greenback is currently worth 99.18 yen. Most analysts are expecting Mr Bernanke to stress that a tapering in of asset buying does not necessarily equate to a tighter monetary policy.

Overnight interest rates are therefore likely to stay as close to zero as possible for a while to come. As long as the US economy continues to prove it is well on the road to recovery, quantitative easing is likely to be slowed down as early as September this year.

Sterling remains under pressure as analysts wait to see how new governor of the Bank of England, Mark Carney, behaves. Although the pound is still floating close to a four-month high of 87.075 per euro at 86.935 pence.

The Aussie dollar has managed to pull away from Friday’s low of $0.8998 to hit $0.9223.