Dollar slumps as Bernanke catches bulls off guard

Investors backing the US dollar were caught out last night after Ben Bernanke, chairman of the Federal Reserve, said stimulus measures are likely to remain in place in the US for some time.

Answering questions about monetary policy, Bernanke said: "Highly accommodative monetary policy for the foreseeable future is what's needed in the US economy." The comments caused major moves in global markets, particularly in FX  markets, with the dollar falling back against a host of other currencies. The dollar index - which tracks the price of the dollar against a basket of currencies - swiftly retreated from a three-year peak, dropping 2.7%. Such a dramatic fall has not been seen since 2008-2009 at the height of the global financial crisis. Both the pound and the euro also ros...