The dollar held declines against the euro before Federal Reserve Chairman Ben S. Bernanke addresses Congress amid speculation the U.S. hasn’t recovered fast enough to warrant reduction in monetary stimulus.
The extra yield investors demanded to hold corporate bonds instead of Treasuries shrank to the smallest level in five years as investors sought ways to supplement income as the Federal Reserve caps benchmark rates.
The Federal Reserve is likely to maintain monetary stimulus, Samarjit Shankar, a Boston-based managing director and senior currency strategist at the Bank of New York Mellon Corp., said in an interview in Singapore.
The euro is under pressure as sovereign-wealth funds and central banks move reserves back into dollars or diversify into other currencies, Samarjit Shankar, a Boston-based managing director for the foreign-exchange group at Bank of New York Mellon Corp., said at a round-table with reporters in Tokyo.
Foreign-exchange traders are putting their faith in Jean-Claude Trichet, betting the European Central Bank President will save the euro from a collapse predicted by everyone from George Soros to Paul Volcker.
Investors boosted bearish bets on the dollar to the highest level in more than two months on concern the political wrangling in Washington on raising the U.S. debt limit will erode the value of the world’s reserve currency.
The euro rose against most of its 16 major peers after two central bank officials said European Central Bank President Mario Draghi will announce unlimited sterilized bond buying to quell the region’s debt crisis.