The dollar was stable versus other currencies Friday morning in New York, but suffered its weekly performance in years following the Fed's surprise announcement earlier that it would buy more than $1 trillion in assets to revive credit markets.
On the flip side, the euro posted its biggest weekly advance against the dollar since its inception, with traders expressing renewed interest in higher-yielding currencies as global equities improved.
However, the dollar may be poised to rebound next week as the steam appears to have come out of the equities rally, potential fueling renewed risk aversion.
There was little economic news from the US for traders to chew on, leaving Fed Chair Ben Bernanke's remarks to bankers in Phoenix in the spotlight.
In his prepared remarks, Bernanke warned banking supervisors to pay close attention to their compensation structures, reflecting the ongoing uproar over $165 million in bonuses given out to executives at American International Group Inc. (AIG).
In economic from across the Atlantic, European Union leaders said at the opening of a two-day summit discussing coordinated efforts to tackle the economic crisis and reforms of the international financial markets that they were doing all they could to combat the region's worst recession in 60 years.
The leaders gathered in Brussels Thursday to discuss adopting a strong, unified stand at the G20 summit in London after rejecting any new stimulus plans as the United States has urged recently, saying that the EU has done enough in this respect.
A draft declaration showed that the European Union will urge the G20 to double the size of the IMF's funds for battling the global recession to $500 billion.
The dollar held its ground versus the euro Friday morning after taking a massive beating over the past two days. The buck stayed near 1.3575, a slightly improvement from yesterday's 10-week low of 1.3737.
The dollar also firmed up slightly versus the sterling, improving to 1.4400 from a monthly low of 1.4596. Thursday, the Bank of England said it will commence purchasing corporate bonds as part of its Asset Purchase Facility on March 25.
The purchase of corporate and Credit Guarantee Scheme bonds will be funded by central bank reserves to improve the functioning of corporate credit markets. These transactions will inject more than GBP 50 billion into the economy.
The dollar also found its footing versus the yen, advancing to 96.30 from yesterday's monthly low of 93.53. Against its Canadian counterpart, the dollar steadied near 1.2400 after hitting a 6-week low of 1.2190 earlier in the week as the price of oil surged above $50.
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