NEW YORK (Reuters) - The dollar fell to near record lows against the
euro on Thursday after Federal Reserve Chairman Ben Bernanke said U.S.
economic growth would remain sluggish, with the housing market expected
to slump further.
Bernanke's comments before a congressional panel supported views
that the central bank would cut interest rates again next month to
cushion the broader economy from the housing market slowdown.
Such a step will further reduce the yield appeal of dollar-denominated assets.
"It's a bit dovish, specifically on the growth side," said Dustin Reid, senior currency strategist at ABN Amro in Chicago.
"That will have the market pricing in a bit higher chance of a Fed
cut, if not for December then in the first quarter of 2008. The market
is focusing on interest rate differentials, so we're seeing the dollar
The euro pushed to session highs at $1.4703 and was last trading at
1.4694, up 0.35 percent on the day. It touched an all-time high of
$1.4730 on Wednesday. Against the yen, the dollar fell 0.1 percent to
112.70, also pulled lower by falling U.S. stocks.
Earlier, the European Central Bank held interest rates steady 4 percent and did not signal a December policy tightening.
ECB President Jean-Claude Trichet warned against "brutal" currency
market moves and said it had become even clearer that a strong dollar
was in the United States' interests. He also reitereated that the ECB
stood ready to tackle inflation.
The dollar index, which measures its value against a basket of six
major currencies, was down 0.4 percent at 75.276, off its record low of
75.077 touched on Wednesday.
(Reporting by Lucia Mutikani and Steven C. Johnson, Editing by Chizu Nomiyama,)