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Sun, Jun 08, 2008 - Page 10 News List

Dollar near two-week high versus Euro

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The US dollar traded near two-week high against the euro after Federal Reserve Chairman Ben Bernanke said an increase in inflation expectations is a “significant concern” for the central bank.

An index gauging the greenback against the currencies of six US trading partners rose on Friday for a third day as Bernanke’s comment led traders to raise bets that policy makers will increase borrowing costs later this year. The European Central Bank is forecast by economists to keep its main refinancing rate at a six-year high.

Bernanke “definitely fed into market expectations of a rate hike later this year,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “It gave a boost to the dollar.”

The dollar was little changed at US$1.5441 per euro in Tokyo, after touching US$1.5411 on June 3, the highest level since May 14. The dollar traded at ¥105.21, following a 0.14 percent increase on Friday. The euro was little changed at ¥162.48.

Bernanke cited an increase in indicators that the public expects prices to rise in a speech at Harvard University in Cambridge, Massachusetts, on Friday.

The consumer price index rose 3.9 percent for the year ended in April and expectations of inflation five years from now rose to 3.4 percent last month versus 3 percent in January, the Reuters/University of Michigan Survey showed.

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