The euro declined against most major currencies on Wednesday in Europe as traders reduced holdings of single currency in response to Fed Chairman Ben Bernanke's testimony before Congress overnight.
The Federal Reserve is prepared to take further action to jump start the sluggish U.S. recovery, the nation's top central banker told lawmakers Tuesday morning.
However, Fed Chairman Ben Bernanke offered no hints that the central bank is specifically planning another round of quantitative easing.
Bernanke will address to the House Financial Services Committee today.
The European currency was also under pressure amid rumors that quoted German Chancellor Angela Merkel as saying she could not be sure that the European project will succeed.
Meanwhile, Germany sold its 2-year treasury notes at negative yield for the first time today as investors continued their flight to safety, reports said citing Bundesbank data.
The country raised EUR 4.173 billion from the sale of its June 2014 treasury notes, also known as Schatz. The target set for the auction was EUR 5 billion.
The euro that held steady against the pound in Asian trading fell after hitting a high of 0.7871 at 4:35 am ET. The euro-pound pair is now trading at 0.7838 with 0.77 seen as the next downside target level. The pair closed Tuesday's deals at 0.7855.
The Bank of England's minutes revealed that the policymakers raised the size of economic stimulus by GBP 50 billion this month through a split vote as Spencer Dale and Ben Broadbent voted to retain it at GBP 325 billion.
At the meeting held on July 4 and 5, seven members of the Monetary Policy Committee including Governor Mervyn King sought an increase in quantitative easing to GBP 375 billion. All nine of the members voted to hold the interest rate at a record low 0.50 percent.
Meanwhile, the latest figures from the Office for National Statistics showed that British unemployment rate declined in the quarter to May.
The ILO unemployment rate fell to 8.1 percent in March-May from a revised 8.3 percent in the three months through February. Economists expected the rate to remain unchanged from the February quarter's original figure of 8.2 percent.
The European currency is now trading at 96.55 against the yen, down from early Asian session's high of 97.33. If the euro slides further, it may target 96.00 level. At yesterday's close, the pair was worth 97.23.
Members of the Bank of Japan's Monetary Policy Board felt that the Japanese economy is showing signs of recovery as domestic demand remains firm, minutes from the bank's meeting on June 14 and 15 revealed today.
At the meeting, the policy board unanimously decided to hold the key uncollateralized overnight call rate at around 0 to 0.1 percent. The size of the asset purchase fund and credit facility was also left unchanged at JPY 40 trillion and JPY 30 trillion, respectively.
Against the U.S. dollar, the euro that rose to 1.2307 in early Asian trading moved sideways thereafter. But the single currency has been falling in European deals with the pair now trading at 1.2229, compared to yesterday's close of 1.2295. If the euro weakens further, it may target 1.21 level.
The euro traded in a tight range against the franc with the pair bouncing between 1.2017 and 1.2011. The euro-franc pair closed yesterday's deals at 1.2015.
Investor confidence in Switzerland improved in July after deteriorating in the previous month, data from a survey by Credit Suisse and the Center for European Economic Research (ZEW) showed today.
The headline index, which reflects expectations of surveyed financial market experts regarding Switzerland's economic development in a six-month time horizon, increased to -42.5 points in July from -43.4 points in June.
The euro hit a 2-day low of 1.2391 against the Canadian dollar from yesterday's close of 1.2445. If the euro declines further, it will break Monday's record low of 1.2369.
Against the NZ dollar, the euro fell from an early 5-day high of 1.5462 and the pair is now trading at 1.5414. On the downside, the euro may target 1.53 level.
The euro touched a fresh record low of 1.1862 against the Australian dollar, compared to 1.1923 hit late New York Tuesday.
Looking ahead, the U.S. housing starts and building permits for June, the Federal Reserve's Beige book Economic survey results are due in the New York session.
by RTT Staff Writer
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