FOREX-Dollar slips vs yen after Bernanke comments

Reuters

* Dollar held back by Bernanke comments on Fed policy

* Japan trade data shows higher-than-forecast deficit

* Euro falls back after hitting 4-year high vs yen

By Laurence Fletcher

LONDON, Nov 20 (Reuters) - The dollar edged lower onWednesday after U.S. Fed Chairman Ben Bernanke said the Fed willmaintain its ultra-easy monetary policy for as long as needed.

The dollar fell 0.2 percent against the yen at 99.95,having risen for much of the past month on expectations theUnited States will begin to wind down its stimulus.

In a speech that echoed dovish comments by his nominatedsuccessor, Janet Yellen, Bernanke said that while the economyhad made significant progress, it was still far from whereofficials wanted it to be.

Bernanke said officials wanted evidence of durable jobgrowth before scaling back the Fed's bond-buying stimulus,adding that interest rates were likely to remain near zero for aconsiderable time after the asset purchases end.

Investors will focus later on the minutes of the FederalOpen Market Committee's October meeting, looking for clues tohow soon policymakers may be prepared to scale back monetaryeasing.

The FOMC next meets on Dec. 17 and 18.

"There might be a few jitters going into the December FOMC,whether they start to taper or ... cut the (unemployment)threshold," said Paul Robson, currency strategist at RBS. "Thatmight keep the dollar on the back foot."

The dollar index was marginally lower at 80.679, havingearlier fallen to 80.535. The euro edged down to $1.3534.

The euro was down 0.2 percent against the yen at 135.31 yen.It hit a four-year high of 135.42 yen in early Asian trade.

Data showed Japan logged a trade deficit of 1.09 trillionyen ($11 billion) in October, a record for the month and above a median forecast of 813.5 billion yen, even as exports rose bytheir largest amount annually in three years.

"The trade data was a little bit soft," said RBS's Robson."That suggests Japanese authorities will have to do more on thecurrency."

Analysts said the low-yielding yen was still the preferredfunding currency for carry trades, with the Bank of Japanexpected to maintain its ultra-loose monetary policy when itmeets on Thursday.

The Australian and New Zealand dollars gave back some recentgains. The Aussie fell 0.5 percent to $0.9385 afterReserve Bank of Australia Assistant Governor Guy Debelle said afall in the Aussie would be preferable.

The kiwi was also down by 0.5 percent at $0.8325.

The U.S. dollar had already been unsettled after Chinasignalled on Tuesday it was willing to tolerate a stronger yuan,meaning it was less likely to buy U.S. dollars to keep itscurrency pinned down.

"Although no timeline was provided, the news should besupportive of further yuan appreciation," analysts at BarclaysCapital wrote in a note to clients.

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