North-West Financial Broker
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10 Feb - Fundamental
The dollar was mixed against major currencies Wednesday as European leaders weighed a decision to provide financial assistance to Greece and Federal Reserve Chairman Ben Bernanke's prepared testimony on unwinding emergency moves to boost lending.
What prices are doing: The dollar was up 0.5% versus the euro to $1.3732 but was down 0.8% against the U.K. pound at $1.5629. Against the Japanese yen, the dollar was up 0.3% to ¥89.94.
What's driving prices: On Tuesday, optimism among investors that European officials meeting this week will provide a rescue package for Greece's building debt gave a lift to euro, which pressured the dollar.
But on Wednesday, there was more uncertainty in the market about whether Greece will be aided, boosting the appeal of the U.S. currency over the euro, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
«The dollar is recovering losses as people grow skeptical about the bailout of Greece,» he said. «There is still a great deal of uncertainty and people have been talking about how difficult it will be to give aid to Greece.»
Federal Reserve Chairman Ben Bernanke had planned to testify before a Senate panel Wednesday on how the central bank will begin to unwind the programs to bolster lending during the financial crisis. While the hearing was postponed due to snow, the Fed released the prepared testimony anyway.
The nation's trade deficit rose to $40.2 billion in December from a revised $36.4 billion in November.
What analysts are saying: Chandler said that if the European Union does decide to provide Greece with a rescue package, there may be a dollar sell-off.
But down the road, he expects the dollar to rise as the U.S. economy improves.
«The dollar's in a new bull market,» he said. «Our friends and foes underestimate the durability of the economy and the dollar, but while the U.S. has some serious challenges, we seem to be in the best position to address those challenges.»
