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Dollar falls on US rate cut talk

The dollar fell against most major currencies as US Federal Reserve Chairman Ben Bernanke said the central bank was ready to take aggressive measures to support the US economy.

“We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” Bernanke said in a speech to a housing and finance group. Wall Street interpreted Bernanke’s comments to mean that there is now an increased likelihood the Federal Reserve will lower its key federal funds rate by a half percentage point, to 3.75%, at the conclusion of its two-day meeting on Jan. 30. The Fed may cut rates up to 1% if there are more reports of weak US economic data in the next two weeks, analysts said. The euro and pound were bolstered as the European Central Bank and the Bank of England decided to keep key rates unchanged on Thursday. Investors speculated that the ECB may raise rates later this year to combat the inflation in the euro zone. The euro rose to $1.4793 in late New York trading, while on Wednesday it was worth $1.4663. The British pound rose to $1.9609 from $1.9572. The dollar rose to 109.54 Japanese yen from 109.47 yen. It fell to 1.1045 Swiss francs from 1.1144 Wednesday, and fell to 1.0108 Canadian dollars from 1.0111. (people.com.cn)