The US dollar slid versus the majority of its most-traded peers as US Federal Reserve Chairman Ben Bernanke said the economy had not deteriorated enough to need immediate stimulus, fueling appetite for higher-risk assets.
The greenback fell for a second week as Bernanke said the Fed still has tools to stimulate the economy, spurring bets it may yet take action and dampening the currency’s appeal.
“Bernanke doesn’t want anyone to think that his finger isn’t on the big red button to do more,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “September could bring the trigger for whatever more is going to be.”
The US dollar fell against 10 of its 16 major counterparts, dropping 0.7 percent versus the euro to US$1.4499 on Friday in New York, from US$1.4397 on Aug. 19. It was little changed versus the yen at ￥76.64, compared with ￥76.55 a week earlier. The euro rose 0.9 percent to ￥111.17, from ￥110.20.
The euro gained this week even amid concern Europe’s sovereign-debt crisis is worsening. Greek government two-year note yields climbed 46 percent, a euro-era record. The European Central Bank bought Italian and Spanish government bonds, according to people familiar with the transactions, to hold down borrowing costs and keep the crisis from spreading to the two countries.
The Swiss franc tumbled versus all of its 16 most-traded peers this week amid speculation the Swiss National Bank would introduce new measures to dampen demand for the currency. Policymakers cut borrowing costs to zero earlier this month, increased bank sight deposits almost sevenfold and left the door open for additional measures.
The Swiss franc fell 3.4 percent to SF1.1690 per euro in the biggest drop in almost two months and weakened 2.7 percent to SF0.8063 per US dollar.
The pound had its steepest weekly drop against the euro in almost two months as reports added to signs the recovery is faltering.
The British currency depreciated 1.4 percent this week to ￡0.8861 per euro at 4:42pm in London on Friday. That is the steepest loss since the five days through July 1. The pound was at US$1.6299 on Friday, after falling as low as US$1.6208, the least since Aug. 12.