Ben Bernanke may have cleared the hurdles to his confirmation for a second term as Federal Reserve chairman, but that does not mean lawmakers will be any friendlier to him at high-profile hearings on Wednesday and Thursday.
The Fed chief's semiannual report to Congress should feature both impassioned debate over financial regulation and lots of questions about the central bank's evolving strategy to remove unprecedented monetary stimulus from the financial system.
With the economy just emerging from the worst recession since the Great Depression, the Fed and its chairman have come under fire for not doing enough to prevent the financial meltdown. Bernanke was confirmed late last month by a 70-30 margin, the tightest-ever Senate vote for a Fed chairman.
"Perhaps the most interesting part of the testimony will be the way the oversight committees treat the chairman, after the hostility they've recently displayed toward the Federal Reserve and Bernanke himself, especially through the confirmation struggle," said Larry Meyer, a former Fed Board governor now with Macroeconomic Advisers. >>
The dollar rose against the euro on Monday as U.S. stock prices dipped and as worries about Greek debt continued to weigh on the European currency.
The euro slipped to $1.3574 according to Reuters data, a session low. Earlier it had climbed above $1.36, well off a nine-month low around $1.3442 hit last week. It was last at $1.3588, down 0.2 percent.
"Stocks have started to soften up and obviously the euro is still facing serious headwinds with regard to Greece," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. >>
EU leaders have given vague assurances they will support Greece in its struggle to stop a debt crisis but finance ministers said on Tuesday Greece might have to take further steps to control its budget problems.
Fears over Greek debt have dented the euro and lifted Greek bond yields and investors are looking closely at what EU states will do next.
Germany, Europe's biggest economy and traditionally a rock of stability in the euro zone, is a crucial player and so far Chancellor Angela Merkel has taken a cautious stance towards aid. Public opinion is firmly against a bailout. >>
Greece must cut its budget deficit by 4 percentage points this year and if it doesn't, additional measures could be called for, Eurogroup chairman Jean-Claude Juncker said on Monday.
"We will have a discussion on the basis of what the European Council agreed upon... Greece has to make sure that it cuts it budget deficit for 2010 by 4 percent and we have to check if this is possible or not, and it will all depend on the answers given to that crucial question," he told reporters as he arrived for a meeting of euro zone finance ministers in Brussels. >>
