Reuters: Most Read Articles: Dollar, German bond yields ease before Bernanke

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Dollar, German bond yields ease before Bernanke May 22nd 2013, 09:31 1 of 7. A man walks through the lobby of the London Stock Exchange August 5, 2011. Credit: Reuters/Suzanne Plunkett By Richard Hubbard LONDON | Wed May 22, 2013 5:31am EDT LONDON (Reuters) - The dollar and benchmark German debt yields eased on Wednesday as expectations hardened that the head of the U.S. central bank will later in the day signal no tapering back of its ultra-loose monetary policy. Two senior Federal Reserve officials struck a dovish tone on the economy in comments on Tuesday, leading many in the market to assume Fed governor Ben Bernanke would follow a similar line when he addresses a congressional committee at 1400 GMT (10 a.m. EDT) That would temper speculation that improved U.S. jobs market would encourage the Fed to begin slowing its bond-buying program later this year. "I don't think Bernanke is going to signal any tapering off at this point which could put the dollar under some pressure," said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley. Against a basket of major currencies, the dollar . shed 0.1 percent to 83.77 in European trade, while the euro added 0.2 percent to $1.2930. The dollar's moves were limited by expectations that minutes from the last Fed rate setting meeting, due for release at 1800 GMT (2 p.m. EDT) after Bernanke's comments, will highlight the debate between policymakers on the future of the bank's $85 billion a month bond buying plan. <FED/DIARY> "Bernanke's comments could see the dollar ease somewhat. But the Fed minutes are likely to be hawkish, so we expect the dollar to regain ground, especially against the yen," Marcus Hettinger, currency strategist at Credit Suisse said. Ten-year German bond yields were down two basis points at 1.39 percent, in line with firm U.S. Treasury prices that were being supported by the signs the Fed will stick with asset purchases for now. SHARES PAUSE Having rallied to multi-year highs on policy stimulus from the Fed and other major central banks, world stock markets were mixed .MIWD00000PUS. The pan-European FTSEurofirst 300 share index .FTEU3, which has risen to a 5-year peak this month, eased 0.3 percent to 1,249 points while the euro zone's blue-chip Euro STOXX 50 index .STOXX50E was unchanged. U.S. stock futures pointed to a firmer open on Wall Street where the Dow and the S&P 500 indexes closed at all-time highs on Tuesday. Earlier Japan's Nikkei climbed 1.6 percent to a 5-1/2 year high .N225 after the Bank of Japan, as widely expected, maintained an aggressively loose policy that will inject up to $1.4 trillion into the financial system. That kept the yen on the back foot against the dollar, which gained 0.4 percent to 102.85 yen. The debate over the Fed's next moves, and particularly the potential impact on the dollar and on growth, also dominated the commodity markets. Gold, traditionally seen as an inflation hedge and alternative to the dollar, was up 1 percent at a session high $1,389.70 an ounce, and the hopes the Fed would continue to support the global recovery lifted copper to its highest in over a month. But oil dropped further below $104 per barrel as data showing a surprise jump in U.S. gasoline stockpiles, suggesting that summer U.S. demand might not meet supply dragged down prices. <O/R> (Additional reporting by Anirban Nag, editing by John Stonestreet.) Link this Share this Digg this Email Reprints

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