Dollar Declines to Lowest in Two Months on U.S. Subprime Mortgage Concerns

(Bloomberg) -- The dollar fell to the lowest in two
months against the yen on concern U.S. subprime mortgage losses
will worsen.

The U.S. currency weakened for a third day on prospects a
National Association of Realtors report tomorrow will show U.S.
existing-home sales dropped last month to the lowest in four
years. Federal Reserve Chairman Ben S. Bernanke testified before
Congress last week that there will be ``significant'' losses on
loans to homeowners with poor credit.


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Japan's Bonds Post Weekly Gain as Concern Rises About U.S. Subprime Losses

(Bloomberg) -- Japanese bonds posted the first
weekly gain this month amid speculation investors sought the
relative safety of government debt because of losses on
securities tied to U.S. mortgages.

The 10-year yield fell to the lowest since July 11 as U.S.
investment bank Bear Stearns Cos. told investors in its two
failed hedge funds that they will get little or no money back.
Federal Reserve Chairman Ben S. Bernanke said on July 19 that
losses associated with the home loans to people with poor credit
may be as much as $100 billion.


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Dollar Is Little Changed Versus Euro After Bernanke Says Growth to Pick Up

(Bloomberg) -- The dollar fell against the yen and
euro as the Federal Reserve lowered its forecasts for U.S.
economic growth for this year and next as home building is
weaker than anticipated.

The revisions came as Fed Chairman Ben S. Bernanke, in
semiannual testimony to the House Financial Services Committee,
predicted U.S. economic growth will pick up slightly next year
and inflation will gradually recede. He also said he expects a
slump in construction to continue to ``weigh'' on growth.


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European Bonds Fall on Speculation Global Growth to Prompt Rising Rates

(Bloomberg) -- European bonds fell on speculation
global economic growth is fast enough to prompt the European
Central Bank to increase interest rates this year.

ECB council member Nicholas Garganas said higher rates are
``warranted.'' Ten-year bunds snapped two-days of gains after
U.S. reports showed factory output rose the most since February
and prices paid to producers excluding food and fuel climbed
more than forecast. Federal Reserve Chairman Ben S. Bernanke may
reiterate tomorrow that the bank is seeking to curb inflation.


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Dollar Little Changed Against Euro Before Bernanke Speaks on Inflation

(Bloomberg) -- The dollar was little changed against
the euro before Federal Reserve Chairman Ben S. Bernanke speaks
on inflation today.

The dollar gained versus Europe's single currency earlier on
speculation Bernanke will reiterate inflation remains the Fed's
``predominant'' concern. The dollar has traded near a record low
against the euro on views that the European Central Bank will
raise borrowing costs again, while the Fed stays on hold.


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Yen May Extend Gains Against Dollar, Euro on Concern About Risk Aversion

(Bloomberg) -- The yen may extend its gains against
the dollar and euro amid concern that demand for riskier assets
may decline with central banks in Europe and Asia likely to raise
interest rates in the months ahead.

Japan's yen rebounded yesterday from a record low against
the euro as investors exited so-called carry trades in which they
buy higher-yielding assets financed by loans in Japan. European
Central Bank President Jean-Claude Trichet and U.S. Federal
Reserve Chairman Ben S. Bernanke said yesterday they are
concerned about complacency in global markets.


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