Forex - Dollar broadly higher on QE tapering concerns

Investing.com - The U.S. dollar traded higher against nearly all of its major rivals during Thursday’s Asian session a day after U.S. equities plummeted on comments made by Federal Reserve Chairman Ben Bernanke regarding the possible end of the third round of quantitative easing.

In Asian trading Thursday, EUR/USD fell 0.25% to 1.2828 after Bernanke said the Fed’s USD85 billion per month bond-buying program, also known as the third version of quantitative easing, will stay in place for now. That is what financial markets wanted to hear, but the Fed chairman threw a curve ball by saying QE could taper off if conditions in the world’s largest economy improve.

In prepared testimony in Congress earlier, Bernanke said ultra-loose monetary policy was providing "significant benefits" to the economic recovery and reiterated that the bank’s asset-purchasing program will remain in place for now.

GBP/USD dropped 0.22% to 1.5018 after the Office for National Statistics said U.K. retail sales fell 1.3% in April from March, the largest fall in a year and defying market calls for a flat reading. Retail sales rose 0.5% from a year earlier, well below expectations for a 2.0% increase.

Separately, the minutes of the Bank of England’s May meeting showed that three policymakers, including Governor Mervyn King, voted in favor of more easing this month, unchanged from April.

Bernanke’s dollar-bolstering comments had the predictable impact of sending the greenback soaring against the yen. USD/JPY rose 0.34% to 103.52, a fresh four-and-a-half year high.

USD/CHF jumped 0.35% to 0.9819 while USD/CAD rose 0.24% to 1.0395 as oil prices drifted lower. In U.S. economic news, the National Association of Realtors said existing home sales rose 0.6% last month to an annual rate of 4.97 million units, the highest level since November 2009.

With China’s PMI report looming later Thursday, AUD/USD fell 0.63% to 0.9641 while NZD/USD fell 0.51% to 0.8036. China is the largest export destination for both Australia and New Zealand.

The U.S. Dollar Index rose 0.25% to 84.58.