* Dollar held back by Bernanke comments on Fed policy
* Euro falls vs yen after hitting 4-year high, down vs
* Japan trade data shows higher-than-forecast deficit
By Laurence Fletcher
LONDON, Nov 20 The dollar edged 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.
The dollar fell 0.2 percent against the yen to 99.93,
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 0.1 percent lower at 80.613.
In a speech that echoed dovish comments by his nominated
successor, Janet Yellen, Bernanke said that while the economy
had made significant progress, it was still far from where
officials wanted it to be.
Bernanke said 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.
Investors will later scour the minutes of the Federal Open
Market Committee's October meeting for clues to how soon
policymakers may be prepared to scale back monetary easing.
The FOMC next meets on Dec. 17 and 18.
Investors will also look to retail sales data on Wednesday
for signs of how strong the economic recovery really is.
"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."
While the dollar lost ground against the yen, it climbed
against the euro. The single currency was down 0.1
percent at $1.3523 and 0.2 percent lower against the yen
at 135.24 yen.
It hit a four-year high of 135.95 yen in Asian trade.
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 a quarter of ECB 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.