Dollar sinks against euro, pound as US Fed chief suggests recession is possible

The Associated PressPublished: April 2, 2008

NEW YORK: The dollar fell Wednesday against the euro and the pound after U.S. Federal Reserve Chairman Ben Bernanke warned Congress that the American economy may shrink over the first half of this year, which would signal a recession.

Meanwhile, the Commerce Department reported Wednesday that U.S. factory orders fell for a second straight month, and the Energy Department reported an unexpected jump in gasoline demand and a big drop in supplies. Oil prices spiked on the news.

The euro bought $1.5664 in late New York trading, up from $1.5601 Tuesday. The British pound rose to $1.9885 from $1.9763. But the dollar broke the pattern by rising to 103.09 Japanese yen from 102.04 yen.

The dollar has suffered amid worries about the fallout from the U.S. subprime lending crisis and the possibility of a recession.

In prepared testimony to U.S. Congress' Joint Economic Committee on Wednesday, Bernanke did not use the word recession, but came the closest to date to suggesting that possibility, given a trio of crises — housing, credit and financial — that has pummeled the country.

"It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke told lawmakers.

In other late New York trading, the dollar slipped to 1.0099 Swiss francs from 1.0130 Swiss francs, and fell to 1.0172 Canadian dollars from 1.0224 Canadian dollars.

http://www.iht.com/articles/ap/2008/04/ ... ollar.php#