USD declines versus euro

Comments from Federal Reserve Chairman Ben Bernanke on Thursday in testimony before Congress in which he reiterated that the Fed is ready to act to aid the slumping US economy led to speculation that the US central bank could cut interest rates by half a percentage point or more when it meets later in the month, hurting the dollar against the euro.

Mr. Bernanke refused to say that the US economy will fall into a recession, however.

The dollar was also hurt by a report of the worst quarterly results in its history from Merrill Lynch (NYSE: MER; TYO: 8675), while the euro was helped when a member of the European Central Bank’s board backed away from earlier comments that led to speculation that the ECB could cut interest rates this year.

At nearly 1 p.m. in New York, the dollar traded at $1.4691 to the euro while it cost ¥157.3132 to buy a euro.

The yen was stronger against almost all major currencies as deepening worries over the US economy sent investors fleeing from risky trades.

The yen traded at ¥107.0850 to the US dollar and at ¥211.2089 to the pound.

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