The dollar fell Thursday after Federal Reserve Chairman Ben Bernanke sounded a broad warning on the U.S. economy and implied that the central bank would keep up interest rate cuts if necessary, reported The Associated Press. Lower interest rates can jump-start a country's economy, but may weigh on its currency as traders transfer funds to countries where they can earn higher returns. The euro rose to $1.4633 from $1.4576 in New York late Wednesday, and the British pound rose to $1.9691 from $1.9649. The dollar fell to 107.93 Japanese yen from 108.20 yen, and slumped to 1.0973 Swiss francs from 1.1079 Swiss francs. The Commerce Department reported Thursday that the U.S. trade deficit narrowed in 2007, dropping to $711.6 billion, after five years or record expansion. A weak dollar made U.S. goods more competitive abroad, boosting exports. The Labor Department also reported Thursday that the number of people filing for unemployment benefits dropped by 9,000 to 348,000 last week. Analysts had expected a drop of only 6,000. However, Bernanke's comments outweighed any positive data, dragging down Wall Street and the dollar. The dollar has grown increasingly resistant to negative economic data over the past few weeks, and it was likewise resistant to Thursday's positive data, said Ashraf Laidi, chief currency strategist at CMC Markets US. Bernanke's «words and his pronouncements bear a greater sense of immediacy on the Fed's negative assessment on the U.S. economy than any economic indicator,» he said, adding «They carry implications of what (the Fed) is going to do.» In other New York trading, the dollar rose to 99.99 Canadian cents from 99.76 Canadian cents.
