“Bernanke isn’t hawkish, so I think he’s more likely to continue monetary easing,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “The market will probably respond with dollar-selling to Bernanke’s remarks.”
Fed Bank of New York President William C. Dudley said in an interview with Michael McKee airing today on Bloomberg Television that policy makers will know in three to four months whether the economy is healthy enough for the central bank to begin reducing stimulus.
The Federal Open Market Committee will release the minutes of its April 30-May 1 policy meeting today.
The franc weakened after Swiss National Bank President Jordan said a shift of the cap on the currency and negative interest rates are among measures it may take to prevent a tightening of monetary conditions.
“The adjustment of the minimum exchange rate is something that principally belongs to the options if needed,” Jordan told reporters in Frankfurt yesterday. “We will maintain the minimum exchange rate for as long as necessary.”
The franc slid 0.6% to 1.2592 per euro and reached 1.2614, the weakest level since May 20, 2011. The Swiss currency fell 0.3% to 97.30 centimes per dollar.
“Some of the Swiss selling on the news flow is understandable, but I don’t think it’s sustainable,” HSBC’s Maher said.
The pound declined to a four-week low against the euro after a government report showed U.K. retail sales unexpectedly dropped last month.
The U.K. currency slid to a six-week low versus the dollar after minutes of the Bank of England’s May 8-9 policy meeting showed Governor Mervyn King was defeated for a fourth month in his bid to expand stimulus. King, David Miles and Paul Fisher maintained their campaign to increase so-called quantitative easing by 25 billion pounds ($37.7 billion) from the current 375 billion pounds.
“The retail sales report today will add downward pressure to the pound,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London. “I have a more optimistic view on the U.K. outlook than the market consensus but I can understand why the data today would boost speculation for further quantitative easing.”
The pound fell 0.6% to 85.70 pence per euro after depreciating to 85.78 pence, the weakest since April 22. The U.K. currency declined 0.4% to $1.5096 after falling to $1.5075, the lowest since April 4.
The Australian currency approached an 11-month low against the U.S. currency after Westpac Banking Corp. and Melbourne Institute said their index of consumer confidence slumped by the most in 17 months.
The Aussie dollar dropped 0.4% to 97.68 U.S. cents after sliding to 97.11 cents on May 17, the weakest level since June 5.