The dollar weakened against the euro and the yen slid versus most of its major counterparts amid speculation Federal Reserve Chairman Ben S. Bernanke will tomorrow announce further stimulus for the U.S. economy. Norway’s krone and Sweden’s krona were the best performers against the dollar and yen as stock market gains in Asia and Europe spurred demand for higher-yielding assets. Speculation has intensified that Bernanke will signal a willingness to embark on a third round of so-called quantitative easing, or QE3, in a speech at Jackson Hole, Wyoming, as the U.S. economy shows signs of faltering. The euro strengthened even after an industry report predicted German consumer confidence will fall. “The market is treating Bernanke’s speech tomorrow almost like a policy meeting,” said Steve Barrow, the London-based head of Group-of-10 currency research at Standard Bank Plc, wrote in a client note today. “If he signals QE3, it could supports higher-yielding assets like stocks, the Scandinavian currencies and the Aussie and Kiwi dollars at the expense of the U.S. dollar.” The dollar declined 0.4 percent to $1.4461 per euro as of 8:31 a.m. in London from yesterday in New York, when it gained 0.2 percent. The yen declined 0.2 percent to 77.11 per dollar and lost 0.6 percent to 111.53 per euro. The U.S. currency has traded within a two-cent range against the euro this week, between $1.4347 and $1.45, before Bernanke speaks at the Kansas City Fed’s annual economic conference. The Fed Chairman may announce “more innovative measures” to boost the U.S. economy than simply announcing further purchases of government debt, Barrow said. To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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