* Dollar accelerates gains against the euro
* Market braced for Bernanke testimony Wednesday, Thursday
* Weak German Ifo weighs on euro, risk appetite
(Updates prices, adds comment)
By Luciana Lopez and Steven C. Johnson
NEW YORK, Feb 23 (Reuters) - The dollar fell against the
yen but rose against the euro on Tuesday after a fall in U.S.
consumer confidence to a 10-year low sapped investor appetite
for risk.
American consumers in February were in their gloomiest mood
since April 2009, as their outlook for the job market worsened,
a private report showed on Tuesday. For details see
[]
"I'm not surprised to see the forex markets reacting by
shifting positions into safer assets," said Matthew Strauss,
senior currency strategist at RBC Capital Markets in Toronto.
"The headline may be overstating the softness in consumer
behavior but it highlights risks to the economic recovery going
forward.
"The shift from government-induced growth to consumer-led
growth will not be without disappointment. We can't see fed
funds going up before the fourth quarter of this year. In the
short-term, safer assets, such as the yen, will get a bit of a
boost," he added.
Against the yen, the dollar last traded down 1 percent at
90.17 yen <JPY=>. The yen often gains when risk aversion rises
as investors unwind trades that were financed with the
low-yielding Japanese currency.
Risk aversion boosted the dollar against the euro, which
last traded at $1.3536 <EUR=>, down 0.5 percent on the day.
Analysts said the market remained wary of Greece's fiscal
problems, which would keep the euro vulnerable to selling even
if it did benefit from short-term bouts of profit-taking.
"The euro tone is so negative that strong data is helpful
for the dollar and weaker data is seen as a mild negative for
the euro because of the risk appetite consideration," said Alan
Ruskin, chief international strategist at RBS Securities in
Greenwich, Connecticut.
Early demand for the euro fizzled after data showed
Germany's Ifo business sentiment index unexpectedly fell this
month and an Ifo economist said Germany's economy, the euro
zone's biggest, may have contracted in the first quarter.
[] and []
Elsewhere, sterling lost nearly 2 cents from a high of the
day of $1.5574 <GBP=D4> to hit a session low of $1.5395 after
Bank of England policy makers said further asset purchases
under its quantitative easing program were possible. It was
last little changed on the day at $1.5472.
A report showing a decline in U.S. home prices in 20
metropolitan areas in December left investors anxious as well
[]
From here, the focus shifts to Federal Reserve Chairman Ben
Bernanke, who testifies before Congress on Wednesday and
Thursday. Investors will be looking for any comments on the
Fed's decision late last week to raise its discount rate -- the
rate charged to banks for emergency loans, which was lowered
after the collapse of Lehman Brothers.
The Fed said the move on the discount rate was not a
harbinger of higher borrowing costs for the broader economy and
reiterated that the federal funds rate, its main monetary
policy tool, would remain low for an extended period.
(Additional reporting by Vivianne Rodrigues, Wanfeng Zhou and
Jessica Mortimer; Editing by Leslie Adler)
