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The dollar fell to a seven-month low against the pound, yen and euro last week as comments by Ben Bernanke were interpreted by the markets as being more dovish than expected.
In testimony to the US Congress, he suggested the two-year “campaign of interest-rate increases” may soon pause, say Edmund Conway, Robert Miller and David Litterick in The Daily Telegraph.
The fall in the greenback’s value came in spite of “strong US economic data”, says Steve Johnson in the FT: durable goods orders came in well above expectations, as did the “core” measure of non-defence capital goods, which was up 3% month on month.
But bad news outweighed good, as Qatar said it was now buying euros over dollars and the G7 called for greater exchange-rate flexibility for emerging markets.
The worry is that “the payments imbalances around the world are enormous”, says William Keegan in The Guardian. These are potentially dangerous should the markets suddenly overreact. “A truly dramatic drop in the dollar, driving the euro sky high, could cause immense damage to a eurozone whose ‘recovery prospects’ are far from assured.”
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Annunziata Rees-Mogg
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