By: Barbara Zigah
Ahead of Ben Bernanke’s testimony later today in the U.S. Congress, the U.S. Dollar is under heavy pressure in Asian trading. As reported at 12:58 p.m. (EST) in Sydney, the U.S. Dollar Index, a gauge of the greenback’s strength versus a weighted basket of major currencies, traded at 76.921 .DXY, just slightly off the 76.576 .DXY low struck yesterday, the lowest price in 3½ months. One analyst suggested that is highly likely that the Fed Chief’s testimony might provoke further selling of the U.S. currency, as he is expected to maintain that the current loose policy and quantitative easing program remains necessary.
Dissimilarly, the European Central Bank is likely to begin discussions on a rate hike when the policy setting committee meets later this week. Investors will likely pay close attention to the outcome, as besides the rate increase potential, the mechanism for withdrawal of the existing financial crisis support system will be raised.
The Euro was trading against the U.S. Dollar at $1.3809, close to $1.3857, a 1-month peak struck yesterday on the EBS trading platform. As calmer nerves prevailed in Northern Africa, oil prices eased back slightly which helped the common currency.