The Dollar slid against the Euro and Yen on Thursday after Federal Reserve Chairman Ben Bernanke said the US economic outlook had worsened and that the central bank would act as needed to support growth. In remarks to the Senate Banking Committee, Bernanke said falling home values, a softer job market and high energy prices are expected to hurt consumer spending in the short run. Bernanke's comments reinforced the impression that the Fed will cut interest rates again, with rate futures pricing in a 50bp rate cut in March. The Fed has cut the benchmark rate by 225bp in the current easing cycle. Bernanke also said changes in monetary policy take time to affect the economy and should boost growth in the second half of 2008, and analysts said that limited Dollar losses.
EurUsd went up to 1.4648 high and closed to the 1.4642 +0.6%. GbpUsd rose 0.11% to 1.9619, while UsdJpy felt from an earlier one-month high of 108.61 to 107.80, down 0.43.
Unlike the Fed, the European Central Bank has held benchmark rates steady at 4%, and ECB Governing Council member Axel Weber said on Thursday that policy-makers are more concerned about inflation than growth.