Dollar steadies after slide

The dollar steadied on Friday after falling the previous day, when a pledge by Federal Reserve Chairman Ben Bernanke to act as needed to support economic growth and tackle downside risks fuelled expectations for another big cut in interest rates next month.
The US currency was little changed, having pulled away from a one-month high against the yen as Bernanke's comments doused the dollar's rally against the Japanese currency this week, while keeping it weak versus the euro.
Also bruising the dollar was Moody's drastic ratings cut of FGIC's bond insurance arm on Thursday, making it the first big bond insurer to lose its top rating from all three major ratings agencies and keeping investors cautious about the struggling credit market.
"The dollar is likely to remain generally weak but it is going to take some time for it to break below the psychologically key 105 yen towards 101 yen," said Masaki Fukui, senior market economist at Mizuho Corporate Bank.
"The market may stay in a wait-and-see mode until additional factors emerge." Bernanke told the US Senate Banking Committee on Thursday that the central bank "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks."
His comments fuelled the view that the Fed will cut its benchmark rate by as much as 50 basis points when the US central bank holds its next policy meeting in March. It chopped 125 basis points from the federal funds rate last month, leaving the rate at 3.0 percent.
The dollar edged up from late New York levels to 108.00 yen. It had slipped to around 107.65 yen in early Tokyo trade, roughly a yen lower than 108.62 yen touched on Thursday for the first time since mid-January. "Attempts to keep the dollar above 108 yen this week have failed, so a climb to 110 yen will be very difficult in the near term," said a trader at a Japanese trust bank.
The yen trimmed earlier broad gains as Tokyo's Nikkei share average rebounded in the afternoon after earlier falling more than 1 percent. The euro rose against the yen to 158.20 recovering from an early slide to 157.65 yen and pulling the dollar and other currencies up against the yen.
The single currency traded around $1.4640 little changed from late New York levels but holding gains made in the past week or so. The high-yielding New Zealand dollar was the session's biggest loser, falling roughly 0.3 percent against the dollar and the yen after domestic retail sales rose less than expected in the fourth quarter.
The figures knocked the New Zealand currency off a one-month high against the yen hit on Thursday, as they indicated a cooling in consumer spending and backed the case for the Reserve Bank of New Zealand to keep rates steady at 8.25 percent, the highest among industrialised countries.