Forex - Dollar falls as Fed says stimulus to stay in place for now

The dollar fell against most major currencies on Thursday after Federal Reserve Chairman Ben Bernanke said stimulus programs will stay in place for the foreseeable future.

Stimulus programs such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery.

In U.S. trading on Thursday, EUR/USD was up 0.95% at 1.3104.

Fed Chairman Ben Bernanke said Wednesday evening that economic data suggest that the U.S. economy still requires highly accommodative monetary policies.

Bernanke made his comments just hours after the release of the minutes from the Fed's June monetary policy meeting, which revealed other U.S. central bankers felt likewise.

Fed language sent the dollar plunging, as many investors were expecting more of a timeline as to when the Fed would begin tapering stimulus programs that weaken the dollar by keeping interest rates low so the economy will strengthen.

Data released Thursday dampened expectations for an imminent end to monetary stimulus programs as well.

The number of individuals filing for initial jobless claims in the U.S. hit a two-month high last week, rising by 16,000 to 360,000, according to the Labor Department, defying expectations for a drop of 4,000 to 340,000.

A separate report showed that U.S. import prices fell 0.2% on a yearly basis in June, above expectations for a 0.1% decline, while exports prices rose 0.2% year-over-year, undershooting expectations for a 0.4% rise.

Meanwhile in Europe, the European Central Bank said in its monthly bulletin interest rates will remain at currently low levels or even lower for an extended period of time, though the news came as little surprise to many traders, who chose instead to focus on the U.S.

The greenback was down against the pound, with GBP/USD trading up 1.21% at 1.5196.

The dollar was down against the yen, with USD/JPY down 0.94% at 98.75, and down against the Swiss franc, with USD/CHF trading down 1.33% at 0.9458.

Earlier Thursday, the Bank of Japan left monetary policy unchanged on Thursday in a widely anticipated decision.

The BoJ also upgraded its assessment of the economy, saying it is starting to moderately recover.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.84% at 1.0378, AUD/USD up 0.07% at 0.9180 and NZD/USD trading up 0.04% at 0.7839.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 1.62% at 82.84.

On Friday, the U.S.  will release official data on producer price inflation as well as preliminary data from the Thomson Reuters/University of Michigan on consumer sentiment.