The greenback rose earlier against the Japanese currency after a report showed U.S. economic growth slowed less than forecast in the second quarter. The yen fell against most of its major counterparts as Prime Minister Naoto Kan said Japan is willing to take “bold” action to reduce its value.
“The remarks from Fed Chairman Bernanke, since he didn’t suggest that further stimulus was on the way for the U.S. economy, lent support to the dollar,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network.
Bernanke said the Fed “will do all that it can” to ensure a continuation of the economic recovery, and discussed steps it might take if growth slows.
The Fed chairman said growth during the past year has been “too slow” and unemployment “too high.” Still, he said a handoff from fiscal stimulus and inventory re-stocking to consumer spending and business investment “appears to be under way.”
European Central Bank President Jean-Claude Trichet is scheduled to speak later today.
U.S. gross domestic product expanded at a revised annual pace of 1.6 percent from April through June, more than the 1.4 percent median forecast of economists surveyed, figures from the Commerce Department showed today in Washington. The government’s initial estimate last month was a pace of 2.4 percent. The economy grew at a 3.7 percent pace in the first quarter.
Fed officials put their exit strategy on hold this month and decided to purchase Treasury securities with principal payments from the bank’s mortgage holdings to keep its portfolio from shrinking as the mortgage bonds mature.
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