Forex - Dollar steady vs euro, yen as markets shrug off Bernanke address

HONG KONG (Thomson Financial) - The US dollar hardly moved against the euro and the yen in afternoon trade in Asia on Friday as Federal Reserve Chairman Ben Bernanke's speech provided little surprise to the market.

Bernanke told the US Senate Thursday the "outlook for the economy has worsened in recent months" due to tight credit and that "downside risks to growth have increased."

"Nothing has changed dramatically," said Thomas Lam, treasury economist at United Overseas Bank.

"Chairman Bernanke's prepared testimony yesterday generally maintained the perception that the weaker growth outlook in the near-term and attendant downside risks would necessitate monetary policy to remain accommodative."

At 1.00 pm (0500 GMT), the euro was trading at 1.4638 dollars from 1.4637 in Sydney this morning. The dollar was quoted at 107.89 yen from 107.86.

"The currency market did not react significantly to Bernanke's remarks. There is no new impetus to move the market in one direction or the other. So the currencies are stuck in a range," said Lam.

The Fed will likely lower its key interest rates by at least 25 basis points when policymakers meet on March 18, Lam said.

But some analysts and economists are betting for a deeper cut of at least half a percentage point.

"It's still a bit too soon to make a firm call on how much the next rate cut will be," said Lam. "While our March 18 Fed call is still for a 25-basis-point rate reduction, the dilated odds in the futures market at this juncture, if sustained in the coming weeks, would probably entail a shift in our forecast to a 50-basis-point rate cut."

The Fed has slashed rates by a cumulative 2.25 percentage points since it began easing its monetary policy in September to help the ailing property and financial sectors which have been reeling from unpaid housing mortgages.

Hawkish comments from European Central Bank member Axel Weber and Britain's recent strong wholesale inflation figures likewise failed to excite the market.

Weber said the ECB would see a noticeable upward trend of long-term inflationary expectations as a "clear signal" that it needs to act.

Hong Kong 1.00 pm (0500 GMT)

US dollar

107.89 yen

1.09701 sfr

Euro

1.4638 usd

158.03 yen

1.6068 sfr

0.7429 stg

Sterling

1.9700 usd

212.61 yen

2.1624 sfr

Australian dollar

0.9036 usd

0.4586 stg

97.53 yen

New Zealand dollar

0.7845 usd