Thu, Feb 28 2008, 16:59 GMT
http://www.afxnews.com
LONDON (Thomson Financial) - The dollar slumped to another all-time low against the euro following dovish comments from Federal Reserve chairman Ben Bernanke, adding to the already negative sentiment for the US currency after yet another set of weak data.
In a testimony before the Senate Banking Committee, Bernanke said the US economy is in a worse position now than it was before the recession in 2001, but acknowledged that inflation is "complicating" the Fed's attempts to prop up the economy.
He also warned on the likelihood of "some bank failures" in the US.
"The recent comments from Bernanke have been seen triggering a fresh bout of dollar selling," said Joel Kruger at Thomson IFR Markets.
The dollar plunged to an all-time low of 1.5195 usd per euro, having already hit fresh lows earlier following weaker-than expected data.
US GDP growth was confirmed at a 0.6 pct rate in the fourth quarter, disappointing analysts' hopes for an upwards revision to 0.7 pct.
Meanwhile, the number of first-time claims filed in the week ending Feb 23 rose by 19,000 to 373,000, way above forecasts for around 350,000. Continuing claims for unemployment meanwhile climbed to their highest level in over two years, the figures showed.
"US Q4 GDP growth was left unrevised ... but domestic demand was apparently weaker than initially thought, with a strong showing from net external demand the only thing preventing the economy from slipping into recession over the final three months of last year," said Paul Ashworth, senior US economist at Capital Economics.
"With initial jobless claims getting closer to the 400,000 a week mark, the odds clearly favour a recession at some point in the first half," he said.
At the same time, rising inflationary pressures were confirmed by the US Commerce Department, as the headline PCE index was revised up to a 4.1 pct annual rate from 3.9 pct previously, while the core PCE index -- closely tracked by the Fed -- stood at 2.7 pct, well above the central bank's unofficial comfort zone of below 2 pct.
"The take away from the data so far this week is that the US economy continues to decelerate while inflation continues to rise," said an analyst at Bank of New York.
The dollar has been in the doldrums this week following a series of weak US data and a downbeat assessment of the economy's prospects from Bernanke yesterday.
Elsewhere, the pound slipped to an all time low of around 0.7641 per euro due to a far weaker-than-than expected UK consumer confidence survey.
GfK NOP's consumer confidence barometer for February, which was released a day ahead of schedule, dropped to -17 from January's -13.
This missed Thomson Financial News' consensus expectation for a more moderate fall to -14, and is the worst reading since December 1994.
London 1639 GMT London 1240 GMT
US dollar
yen 105.45 down from 106.33
sfr 1.0511 down from 1.0612
Euro
usd 1.5188 up from 1.5100
stg 0.7634 up from 0.7611
yen 160.15 down from 160.50
sfr 1.5964 down from 1.6027
Sterling
usd 1.9887 up from 1.9832
yen 209.72 down from 210.85
sfr 2.0908 down from 2.1053
Australian dollar
usd 0.9466 up from 0.9414
stg 0.4757 up from 0.4744
yen 100.84 up from 100.08
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