Forex News – EURUSD hits three-week high after Bernanke comments

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The dollar fell sharply after U.S. Federal Reserve Chairman Ben Bernanke began to speak at the National Association for Business Economists 2012 Policy Conference, in Arlington.

The Fed Chairman’s comments that the U.S. labour market was “far from normal” despite recent improvement caused USDJPY to dip to 82.59 within twenty minutes of his speech that began at 12:00 GMT, paring all gains after rising to an earlier high of 82.99.

Euro hit a three-week high against  the dollar, with EURUSD reaching 1.3320 from 1.3243 just before the speech began. USDCHF tumbled to 0.9040 from 0.9100.

Bernanke was being more dovish by saying the world’s largest economy needs to grow faster to bring down unemployment.

His comments fuel speculation that U.S. monetary policy would remain in place for some time and that the Fed could possibly introduce another round of quantitative easing.

“We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Bernanke said.

Bernanke said that the recent improvement in the labor market since Q4 last year,  which saw a decline in the jobless rate from 9.1 percent last summer to 8.3 percent in February, was “somewhat out of sync” with the rather modest pace of economic growth.

He suggested it may only be a reversal of large layoffs during the recession, and further improvement may depend on faster economic growth.

U.S. gross domestic product grew 3 percent in the fourth quarter, but is expected to have slowed to just below 2 percent in the first three months of this year.