Forex - Dollar falls as Bernanke offers no new policy stance

Investing.com - The dollar slid against major global currencies on Wednesday after Federal Reserve Chairman Ben Bernanke appeared before Congress earlier but offered no new policy stance on monetary easing.

The market sold the unit to await further Bernanke testimony later Wednesday as well as the release of  a key Fed economic report.

Stronger-than-expected earnings in the U.S. gave investors reason to sell the greenback and invest in equities.

In Asian trading on Wednesday, EUR/USD was trading down 0.01% at 1.2293.

At a congressional testimony earlier, Fed Chairman Bernanke reiterated earlier stances on monetary stimulus, stressing that while the Fed is not preparing to act now, it won't shut the door on it either.

"Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to the economic outlook, the Committee made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," Bernanke told lawmakers.

Such comments would normally send the dollar rising, as stimulus tools such as quantitative easing weaken the greenback in a way that spurs recovery.

However, Bernanke will return to Congress later Wednesday, while the Fed will release its Beige Book, a group of summaries on the nation's economy, later in the day as well, giving markets more chance to uncover a signal indicating easing is more imminent or not.

Meanwhile, stronger-than-expected earnings in the U.S. sparked demand for stocks in Asian markets.

Yahoo! surprised Wall Street by positing second-quarter earnings excluding items of USD0.27 per share, up from USD0.18 cents a share during the same period a year earlier.

Net revenue, which does not include fees paid to partner websites, hit USD1.08 billion in the quarter, up from USD1.076 billion at this time last year.

Analysts had expected the company to report earnings excluding items of USD0.23 per share on revenue of USD1.1 billion, according to Thomson Reuters forecasts.

Earlier Tuesday, chipmaker Intel beat forecasts as well.

The company reported second-quarter earnings excluding items of USD0.54 cents per share, unchanged from USD0.54 cents a share in the year-earlier period.

Revenue rose 4% to USD13.5 billion from USD13.03 billion a year ago.

Analysts were expecting the company to report earnings excluding items of USD0.52 a share on USD13.56 billion in revenue, according to a consensus estimate from Thomson Reuters.

Coca-Cola and Goldman Sachs surprised on the upside as well.

Also weakening the dollar were Bernanke's suggestions for lawmakers to address an upcoming fiscal adjustment, when tax breaks expire and spending cuts kick in at year end, a combination known as a fiscal cliff, which could knock the economy right back into recession next year if Congress fails to act.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.03% at 1.5658.

The dollar was up against the yen, with USD/JPY trading up 0.05% at 79.11, and down against the Swiss franc, with USD/CHF trading down 0.03% at 0.9770.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.02% at 1.0122, AUD/USD down 0.11% at 1.0305 and NZD/USD down 0.15% at 0.7970.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.02% at 83.11.

Later Wednesday, the U.S. will release data on building permits and a report on housing starts.

The country is also to release government data on crude oil stockpiles.

Federal Reserve Chairman Ben Bernanke is to testify for a second day on the on the bank’s monetary policy report before Congress.

The Fed will also release its Beige Book, a group of summaries on the nation's economy, later in the day.