Investor attention remains focused on the turmoil around Fannie and Freddie and fears about more credit losses at regional banks drove the Dollar sharply lower a day ago, with the Euro hitting a record high at 1.6037. But concerns about the US financial sector receded a bit on Wednesday after Wells Fargo, the fifth-largest US bank, raised its dividend despite a 23% decline in profit caused by bad loans.
Federal Reserve Chairman Ben Bernanke reiterated to a House of Representatives panel on Wednesday that the risks to US growth have increased along with upside inflation risks, mirroring remarks he made a day earlier before the Senate.
Analysts said FX investors were increasingly certain of at least one Fed rate hike before the year is out. US short-term interest rate futures are pricing in a 76% chance that the Fed raises interest rates from their current 2% by December.
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