U.S. Dollar Rises on Fed Chairman Comments

The U.S. Dollar rose sharply in late morning trading in Sydney following positive comments about the U.S. economy, made by Ben Bernanke, chairman of the Federal Reserve Bank.   His comments confirmed investors’ views that the Federal Reserve has ome to the end of its interest rate cutting exercise and would likely start hiking interest rates soon in an effort to cut inflation.

On June 10, 2008, at 10:55 am (00:55 GMT) the U.S. Dollar traded at 106.79 Yen, compared to 106.30 Yen, while the Euro traded at $1.5578 from $1.5645 in late trading in New York.

At a press conference on Monday in Chatham, Massachusetts, the Federal Reserve Chairman Bernanke said, “the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”  Bernanke also raised concerns about high inflation, resulting from high oil prices.  On Monday, oil prices closed at $134.35 per barrel, compared to $139.12 last week.

Most analysts agree that the market had been anticipating hawkish comments from the Federal Reserve Chairman.  It is clear from Bernanke’s comments that combating inflation is now a top priority of the Federal Reserve Bank.