Movement:

In the Asian session, The euro inched up against the dollar on Wednesday, after being knocked from a 10-week high above $1.3000 the previous day due to profit-taking ahead of euro zone bank stress test results this week. In the Europe session, The euro slipped against the dollar on Wednesday after a weak auction of Portuguese debt highlighted the fragility of the euro zone banking sector ahead of European bank stress test results later in the week. In the US session, The euro fell sharply against the dollar while the yen rallied on Wednesday after Federal Reserve Chairman Ben Bernanke expressed concern about the U.S. economy and dampened risk appetite.

US:

Federal Reserve chairman Ben Bernanke on Wednesday acknowledged worrisome structural problems of stubbornly high unemployment, intensifying concerns of a double-dip recession and rattling already nervous markets, the chief of the world's largest bond fund said on Wednesday.

Japan:

Bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank is watching currency moves carefully but shrugged off any suggestion that rises in the yen to a specific level would trigger more monetary easing. Yamaguchi, a career central banker whose views are thought to be close to those of Governor Masaaki Shirakawa, acknowledged he saw recent exchange rate moves as yen strengthening, and that such moves would affect Japanese exports.

Euro zone:

German Chancellor Angela Merkel played down on Wednesday recent U.S. concerns that her austere budget policy could stifle recovery, saying consumer sentiment in Germany was better when there was tight budget control. U.S. officials had expressed concern ahead of last month's G20 summit in Canada that excessively deep and fast budget cuts in Europe, like Merkel's 80 billion euro savings plans, could hamper the nascent economic recovery. The Bank of England's Monetary Policy Committee voted 7-1 to keep interest rates at 0.5 percent this month, and discussed both easing and tightening policy, minutes of their July 7-8 policy meeting showed on Wednesday.    Andrew Sentance voted for a second consecutive month to raise interest rates by 0.25 percentage points, but there was little sign that other members of the committee were warming to his view, with arguments for easing considered explicitly too.