The dollar received a boost following the released text of Fed Chairman Bernanke’s speech to the Economic Club of New York.
In the speech, Bernanke said that short-term rates may still need to be higher than usual if long rates reflect small-term premiums. He said that the implications for monetary policy of the recent behaviour of long-term yields are not at all clear-cut.
He doesn’t view the flat US yield curve as being indicative of a significant economic slowdown but acknowledged they must be closely monitored. Nevertheless, he stressed that the Fed should base monetary policy on a broader range of indicators.
Bernanke said that the low yields may reflect high levels of saving in Asian countries and a lack of investment opportunities.
Earlier in the session, US data consisted of just the release of the February leading indicators index.
The LEI reversed January’s 1.1% rise, dropping 0.2% on the month. However, it was slightly better than forecasts for a decline by 0.3%.
Economic reports from the US slated for release on Tuesday will see February PPI, forecasted to drop 0.2% compared with a 0.3% rise a month earlier.
The core PPI reading is expected to rise just 0.1%, down from 0.4% in January.