FOREX-Dollar dips as Bernanke cites growth risks

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By Steven C. Johnson

NEW YORK, Feb 14 (Reuters) - The dollar dipped against the euro and yen on Thursday after Federal Reserve Chairman Ben Bernanke said the U.S. economic outlook had worsened and that the central bank would act as needed to support growth.

The euro edged up to $1.4608 <EUR=> after Bernanke's prepared remarks before the Senate Banking Committee, about 0.3 percent above its late Wednesday level.

Against the yen, the dollar fell 0.1 percent to 108.22 yen <JPY=> after earlier touching a fresh one-month peak of 108.61 yen.

Bernanke's commentary "sounds fairly dovish," said Steve Malyon, currency strategist at Scotia Capital in Toronto. "Policy-makers are clearly ready to provide further monetary easing to support growth."

Since September, the Fed has slashed benchmark interest rates by 2.25 percentage points to 3 percent, and markets expect more cuts ahead, with the next seen coming at the central bank's mid-March policy meeting.

Bernanke did also say that he expects sluggish U.S. growth to pick up later this year, and some said that was keeping the foreign exchange market reaction modest.

"We do expect growth to pick up because of the rate cuts and there is usually a nine-month lag," Ken Landon, global foreign exchange strategist at J.P. Morgan in New York. "But I don't think that will hold him back from cutting rates further. Overall, the market is pretty comfortable with the trajectory of lower rates going forward."

(Reporting by Steven C. Johnson; Additional reporting by Nick Olivari and Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)