Forex: Weekly review

On Monday the dollar fell against its higher- yielding counterparts as Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to reduce U.S. unemployment. The euro strengthened against the U.S. currency as Germany said it may back plans to increase the debt-crisis rescue funds before the region’s finance ministers meet March 30.

On Tuesday the dollar rose against the euro and the yen as U.S. economic data indicated a strengthening recovery, undermining the case for more stimulus from the Federal Reserve.

The U.S. currency gained from the lowest level this month against its 17-nation European counterpart as reports showed home-prices declines slowed and consumer confidence this month stayed close to the highest level in a year. The yen has depreciated 10.8 percent this year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has fallen 2.7 percent, and the euro has gained 0.4 percent.

On Wednesday the dollar gained against the majority of its 16 most-traded peers amid concern the rate of global growth is slowing spurred demand for the haven of the U.S. currency. The greenback strengthened after a report showed U.S. factory orders trailed forecasts and the United Kingdom revised first-quarter growth downward. The 17-nation euro pared losses after a draft statement from European finance ministers showed governments are preparing to increase rescue funds. The yen strengthened amid speculation Japanese companies will repatriate overseas earnings before the end of the fiscal year on March 31. Britain’s pound fell after a report showed the economy shrank more than first estimated in the fourth quarter, strengthening the case for the central bank to maintain asset purchases.

On Thursday the yen rose against all of its 16 major counterparts as concern increased that Europe’s sovereign- debt crisis threatens global economic growth and stocks dropped amid safety demand. The 17-nation currency euro fell from almost a one-month high versus the dollar after economic confidence in the region unexpectedly declined in March. An index of executive and consumer sentiment in the 17- nation euro area fell to 94.4 from a revised 94.5 in February, the European Commission said. Economists had forecast a gain to 94.5 from a previously reported 94.4, the median of 29 estimates showed. The pound rose the most in two weeks against the euro after a European report showed consumer confidence fell, boosting the appeal of U.K. assets as a haven.

On Friday the euro rose versus the dollar, heading for its biggest quarterly gain in a year, after European finance ministers agreed to boost an anti-debt-crisis firewall, adding confidence the region’s financial problems are abating. The dollar fell against most of its major counterparts as stocks and commodities advanced, boosting demand for higher- yielding assets. The yen erased gains after touching a three- week high against the dollar amid speculation companies are bringing home overseas earnings before the fiscal year ends.