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Dollar slips ahead of Bernanke, Bush speeches

Another focus was Federal Reserve Chairman Ben Bernanke, set to give a speech Friday morning on the housing sector. Some dealers anticipated Bernanke may indicate the Fed is leaning toward cutting its benchmark interest rate, although many expected him not to offer clear guidance on the outcome of the next policy meeting in September.

The dollar index, a gauge of the greenback’s performance against a basket of six major currencies, fell 0.3 percent to 80.576 .DXY.

The euro EUR was up 0.4 percent at $1.3690, after earlier hitting a three-week high around $1.3719. The dollar was up 0.3 percent, at 116.28 yen JPY, supported by US stock market futures, which pointed to a higher open.

Dealers have been watching the US stock market for indications of investor appetite for risk. In recent weeks, stronger stock markets have have come in tandem with a weaker yen, as investors buy higher-yielding currencies.

Bernanke is scheduled to speak on housing and monetary policy at 10 a.m. (1400 GMT).

”If Bernanke offers no sympathy -- meaning the Fed doesn’t want to bail out the financial sector -- you’ll see all these moves reversed in a matter of moments,” said Joe Francomano, vice president of foreign exchange with Erste Bank. “Anything short of mentioning an easing bias will be met with disappointment.”

The dollar barely reacted after the release Friday of a widely watched gauge of underlying US inflation in July was below expectations, although personal income exceeded forecasts.