The U.S. Dollar declined and the Dollar Index fell for a second consecutive week after the Federal Reserve’s Chairman, Ben Bernanke, suggested that the implementation of further monetary stimulus could help reduce high unemployment. Mr. Bernanke indicated during his speech in Jackson Hole Wyoming, that unemployment has become a “grave concern” and the central bank may consider additional bond purchasing steps in the future. The greenback weakened against the Yen on economic calendar reports showing that business activity in the U.S. grew at a slower place in August.
Meanwhile, Mr. Bernanke’s comments spurred an increase in the Euro rate despite lackluster releases confirming that unemployment remained at 11.3% in the Euro-zone. The shared currency strengthened just days after the E.U. President, Herman Van Rompuy, stated that the region’s bailout fund is ready to help troubled Spanish banks. The Euro was also supported by optimism that the European Central Bank will announce a new plan to help stabilize the sovereign debt markets.
In other world currency reports, the Australian Dollar traded close to a five-week low amid worries a slowdown in China’s manufacturing sector will affect the domestic economy. But the Aussie rebounded on the possibility that the Federal Reserve will implement another round of quantitative easing in the near future.
The British Pound gained against the U.S. Dollar at the end of last week following comments by Fed Chairman Bernanke signaling the Fed will act to boost economic growth. However, Mr. Bernanke did not state that this would happen right away.