YEREVAN, May 22. /ARKA/. The U.S. dollar slipped Wednesday, trading down against major rivals as investors waited to hear Federal Reserve Chairman Ben Bernanke’s view of the U.S. economy and what that may mean for the Fed’s current easing program.
Minutes from the Federal Open Market Committee (FOMC) meeting earlier this month were also scheduled for release later Wednesday, at 2 p.m. U.S. Eastern time.
The ICE dollar index DXY +0.03% , a gauge of the greenback’s movement against six other major currencies, sat at 83.779, down from 83.877 late Tuesday in North America, when the greenback was on an uptrend.
The WSJ Dollar Index XX:BUXX -0.02% , an alternative measure of the currency’s moves against a slightly wider basket, fell to 75.39 from 75.42 late Tuesday.
The euro EURUSD +0.21% bought $1.2924, up from late Tuesday’s level of $1.2897.
Bernanke was due to testify before the Joint Economic Committee of Congress at 10 a.m. U.S. Eastern. Investors look for any clues as whether the Fed will alter the pace of its bond purchases based on the economic outlook, and when any such move might take place.
Bond buying has been part of the Fed’s effort to bolster economic growth by holding long-term interest rates down, but the easing has also raised the risk of hurting the appeal of the dollar’s yield, analysts have said.
It serves Bernanke’s interest to indicate that decisions on the pace of asset purchases are a function of changes in employment and inflation, said Brown Brothers Harriman global head of currency strategy Marc Chandler in note Tuesday.
“If this does, in fact, materialize, we suspect it would be supportive for U.S. Treasurys while weighing on the dollar,” said Chandler. “To the extent that the FOMC minutes show that there are some at the Fed who think it should be doing more, it may also push the markets in the same direction.”
Earlier this month, The Wall Street Journal reported Fed officials have were mapping out a strategy for winding down the monthly $85 billion bond-buying program, but the timing was still being debated.
Heading into Bernanke’s testimony, St. Louis Fed President James Bullard said Tuesday the central bank should continue with its current bond-buying program and adjust the rate of purchases in view of incoming data on growth and inflation.
Last week, three regional Fed presidents said they foresee the bond buying drawing to a close.
–0–
