Dollar extends losses after Bernanke's dovish comments
TOKYO (Reuters) - The dollar extended falls on Thursday, rapidly retreating from a three-year peak, after Federal Reserve Chairman Ben Bernanke said highly accommodative monetary policy would be needed for the foreseeable future.
Financial markets have recently sold off on concerns that the Fed may begin to scale back its $85 billion a month bond-buying program as soon as September.
But Bernanke's comments, which played down the strength of last week's June payrolls report, prompted investors to reassess the risk of an early end to the Fed's program. They cut long dollar positions and sent U.S. Treasuries futures surging.
"I was pretty shocked with this selloff this morning. Obviously, Bernanke kicked it all off, but it was a bit delayed reaction," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo.
"I'm hearing there were some margin calls, stop losses triggered there, and it moved down, so it seems like it's pretty thin and maybe some Asian players were trying to unwind their dollar longs.
"But it does seem like a bit of an overreaction. Having said that, it's a bit surprising, all of a sudden, the change in the tone of Bernanke, so it's a whole new world all of a sudden."
The dollar index swiftly retreated from a three-year peak, dropping 2.7 percent -- a magnitude not seen since 2008-2009 at the height of the global financial crisis.
The euro surged 1.2 percent to a three-week high of $1.3139. Against the yen, the dollar eased 0.8 percent to a two-week low of 98.825 yen.
As the yen strengthened, Tokyo's Nikkei share average .N225 was set to open lower, ahead of the outcome of a Bank of Japan's policy meeting later on Thursday.
U.S. crude oil prices added 0.2 percent after trading as high as $106.95 a barrel, their highest level since March 2012, and extending Wednesday's 2.9 percent jump, their biggest one-day rise in more than two months, as U.S. data showed the biggest two-week decline on record in oil stockpiles.
(Additional by Lisa Twaronite in Tokyo and Ian Chua in Sydney; Editing by Mark Bendeich)
- Tweet this
- Share this
- Digg this
- UPDATE 3-Obama critic D'Souza spared prison for violating election law
- U.S. and Arab allies launch first strikes on militants in Syria
- Fired UPS worker kills two supervisors, self, in Alabama shooting
- New U.S. tax rules chill 'inversion' deal-making; shares dive |
- Chinese and Indian troops in Himalayan standoff
Retaining talent, reviving company
Infosys Ltd's new CEO has come up with a novel approach to reviving the financial fortunes of India's trailblazing outsourcing firm: use Facebook at work, tweet, but get the job done. Full Article