* Bernanke says rates may stay near zero for a time after
* Euro falls vs yen after hitting four-year high, down vs
* U.S. data shows unexpected fall in October inflation
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 20 The dollar drifted lower on
Wednesday after Federal Reserve Chairman Ben Bernanke said the
U.S. central bank would maintain its ultra-easy monetary policy
for as long as needed.
Bernanke said late on Tuesday officials wanted evidence of
durable job growth before scaling back the Fed's bond-buying
stimulus, adding that interest rates were likely to remain near
zero for a considerable time after the asset purchases end.
A mixed set of U.S. economic data provided no clue as to
when the Fed will eventually reduce its asset purchases, with
benign consumer prices largely offsetting the
faster-than-expected rise in retail sales.
"The inflation data affirms the Fed's easy policy stance,"
said Joe Manimbo, senior market analyst at Western Union
Business Solutions in Washington.
The dollar fell 0.2 percent against the yen to 99.90,
having risen for much of the past month on expectations that the
United States would begin to wind down its stimulus. The dollar
index was also down 0.2 percent at 80.565.
The rise in U.S. retail spending failed to ignite the
dollar, with U.S. inflation falling unexpectedly in October.
In a speech that echoed dovish comments by his nominated
successor, Janet Yellen, Bernanke said while the economy had
made significant progress, it was still far from where officials
wanted it to be.
Investors will later scour the minutes of the Federal Open
Market Committee's October meeting for clues about how soon
policymakers may be prepared to scale back monetary easing.
The FOMC next meets on Dec. 17 and 18.
"There might be a few jitters going into the December FOMC,
whether they start to taper or ... cut the (unemployment)
threshold," said Paul Robson, currency strategist at RBS. "That
might keep the dollar on the back foot."
The dollar was flat against the euro, which was last
$1.3538. The euro was down 0.2 percent versus the yen at 135.20
. It earlier hit a four-year high of 135.95 yen in
Ulrich Leuchtmann, head of FX research at Commerzbank in
Germany, said the euro had been recovering from an unjustified
sell-off since the cut in euro zone interest rates earlier this
month, but that rally had now played out.
"From a fundamental perspective it makes sense for there to
be a (rebound in the euro)," he said. "(But) the justified
correction has run out of steam."
Around one-quarter of European Central Bank council members,
led by Bundesbank chief Jens Weidmann, spoke out against the
rate cut this month, and those divisions were highlighted on
Wednesday when Weidmann said the ECB should not signal any
further easing of its monetary policy for now.
Data on Wednesday showed Japan logged a trade deficit of
1.09 trillion yen ($11 billion) in October, a record for the
month and above a median forecast of 813.5 billion yen, even as
exports rose by their largest amount annually in three years.
"The trade data was a little bit soft," said RBS's Robson.
"That suggests Japanese authorities will have to do more on the
Analysts said the low-yielding yen was still the preferred
funding currency for carry trades, with the Bank of Japan
expected to maintain its ultra-loose monetary policy when it
meets on Thursday.