RTRS: Dollar rises on Bernanke; Canadian dollar soars
The dollar rose broadly on Friday after Federal Reserve Chairman Ben Bernanke said the U.S. central bank will be ready to tighten monetary policy as an economic recovery takes hold.
The greenback, however, fell versus the Canadian dollar, which hit a one-year high after Canada reported employers added six times as many jobs as expected in September, knocking down the unemployment rate for the first time since July 2008.
The U.S. dollar, which had taken a beating for much of the week, recovered some of its losses against the euro on Friday and pulled away from an 8-1/2-month low hit against the yen earlier in the week. Despite Friday's gains, the dollar remained lower against a currency basket on the week.
Bernanke, in remarks delivered late on Thursday, said that while the Federal Reserve must continue to prop up the economy for an extended period, it cannot do so indefinitely for fear of an inflationary surge.
The Fed has cut interest rates to near zero percent and pumped hundreds of billions of dollars into the financial system to help boost the economy.
The dollar's rise "was certainly sparked by Fed Chairman Bernanke's reassuring comments," said Joe Manimbo, currency trader at Travelex Global Business Payments in Washington. "Also, I think given the extent of the dollar's losses this week and being the last day of the week ahead of a long weekend, that helped to spur maybe a little bit of profit-taking."
The U.S. bond market will be closed on Monday for the Columbus Day holiday. Monday is also a holiday in both Japan and Canada.
In midday trading, the ICE Futures U.S. dollar index .DXY, which tracks the greenback against a basket of six major currencies, was up 0.5 percent at 76.272, above Thursday's 14-month low of 75.767. The index is on track for a weekly loss of about 1 percent.
Despite the market's reaction to Bernanke's comments, analysts said he did little more than state the obvious in that the Fed would be ready to tighten policy when the economy improves.
"He did not give any hints as to what the timing of the tightening might be. If anything, he actually repeated that policy is likely remain accommodative for an extended period," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.
"We'll see where we end today," Serebriakov said. "I think the overall short-term trend for dollar weakness is still very much intact."
CANADA SURGES
Against the yen, the dollar rose 1.5 percent to 89.71 yen, on track for its biggest daily gain in two months. The dollar fell as low as 88.01 on electronic trading platform EBS on Wednesday, its weakest since January.
The euro slipped 0.5 percent to $1.4722, retreating from a two-week high around $1.4815 hit on Thursday.
European Central Bank President Jean-Claude Trichet said on Thursday that U.S. support for a strong dollar was important and excessive currency moves were unwelcome.
