RTTN: Dollar Down Versus Euro, Rallies Versus Swiss Franc Friday
(RTTNews) - The dollar floundered on Friday, falling sharply versus the euro and sterling after Federal Reserve Chairman Ben Bernanke said the central bank will explore easing monetary policy in September.
While Bernanke did not specifically allude to a third round of quantitative easing, markets took note that the Fed will meet in two days instead of one next month -- a sign that policy makers will debate significant measures to jump start the sluggish economy.
U.S. economic growth in the second quarter of 2011 was slower than initially reported, according to figures released Friday by the Commerce Department.
Following weak gross domestic product growth in the first quarter, second quarter GDP increased at an annual rate of 1 percent, according to the report.
The dollar tumbled to $1.45 against the euro, moving to the lower end of a stubborn recent trading range. The buck gave back this week's gains versus the sterling, slumping to $1.6350 from a 2-week high of $1.6207.
Ratings agencies responded to rumors that Germany was facing a downgrade by affirming the nation's AAA status.
Meanwhile, the U.K. economy logged weak growth in the second quarter as estimated in July. The recovery was pulled down by production, though the dominant service sector managed to expand.
The economy grew 0.2 percent in the second quarter from the previous three months, second estimates published by the Office for National Statistics showed Friday. The growth rate slowed from 0.5 percent seen in the first quarter.
The dollar dropped to Y76.50 versus the yen, edging back toward this month's record low Y75.93.
On the flip side, Swiss authorities were successfully able to jawbone their franc lower by suggesting they are considering deposit fees. The dollar rose to CHF 0.8156, pulling away from a record low near 0.70 set on August 9.
Traders will be kept on their toes this weekend, as European Central Bank President Jean-Claude Trichet speaks Saturday from Jackson Hole.
