USD falls on Bernanke comments

The US dollar was lower versus the euro on Wednesday on comments from US Federal Reserve chairman Ben Bernanke, who said in testimony before the House Financial Services Committee that the Fed is “ready” to do what is necessary to protect the US economy.

Many analysts took this to meant that more interest rate cuts are coming in the US, and some traders expect the cuts to amount to 2 more percent by the middle of the year.

The main US interest rate now stands at 3 percent.

The dollar also declined on new Commerce Department data which showed that durable goods orders in the US fell 5.3 percent in January, more of a decline than had been expected.

At around 11:30 a.m. in New York, the dollar was trading at $1.5122 to the euro and at $1.9910 to the pound, while it took ¥106.4100 or SFr1.0640 to buy a dollar.

The Canadian dollar was higher on gains in commodities prices, with one loonie worth $1.0193.

The Australian dollar saw gains on the possibility that interest rates there will go up in March in an attempt to control inflation.

The expectation that the Reserve Bank of Australia will hike interest rates by a quarter of a percentage point to 7.25 percent sent the US dollar to 94.09 cents to the Australian dollar by late morning trade in New York.