Dollar strengthens over yen, weakens against euro

The Federal Reserve Chairman Ben Bernanke warned the Senate Banking Committee today that unless government efforts succeeded in restoring financial stability, the US recession may not end this year. Furthermore, US figures showed that consumer confidence fell to a record low in February and houses prices fell at a record pace in December.

These announcements had the effect of spreading risk aversion and encouraging investors to sell the Japanese yen and buy the US dollar. Demand for the greenback as a safe haven saw it hit a 3 month high over yen. The yen was also undermined as investors remain worried about its struggling economy and the lack of a convincing plan to aid it. As such it's safe haven status continues to be eroded.

USDJPY: 1 week chart. Click on graph to enlarge.

Against the euro this poor news actually saw the dollar weaken despite news from the eurozone that industrial new orders (the value of new contracts for goods in the manufacturing sector) fell by 22.3% in the last year.

EURUSD: Today's trading. Click on graph to enlarge.