Dollar under pressure as Fed looks set to keep stimulus
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Dollar under pressure as Fed looks set to keep stimulus

Last Updated: Saturday, October 26, 2013, 10:10
 
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Dollar under pressure as Fed looks set to keep stimulus
New York: The dollar was under pressure Friday as disappointing US economic data reaffirmed views that the Federal Reserve will keep its foot on the stimulus pedal into next year.

The euro bought USD 1.3805 around 2200 GMT, up from USD 1.3798 Thursday.

The dollar rose to 97.43 yen from 97.29 yen, while the euro also gained against the Japanese currency, climbing to 134.50 yen from 134.26 yen.

"Investors sold US dollars this week on the growing belief that the Federal Reserve will pass on reducing asset purchases this year," said Kathy Lien of BK Asset Management.

"Since the US government was shut down at the beginning of the month, more investors started to adjust their positions in currencies in favor of tapering in 2014 versus 2013, but the selling accelerated when nonfarm payrolls missed expectations."

The September jobs report, delayed due to the 16-day shutdown and published Tuesday, showed anemic job growth even before a fierce Washington budget battle forced the October 1 shutdown, furloughing hundreds of thousands of federal workers.

The government reported Friday a 3.7 percent jump in US durable goods orders, but excluding transportation equipment orders, which can be erratic month-over-month, orders fell 0.1 percent, and core capital goods orders, a sign of future business investment, fell 1.1 percent.

Traders awaited the Federal Reserve`s two-day monetary policy meeting of the Federal Open Market Committee that opens Tuesday to gauge the prospects of when the central bank may begin cutting back its USD 85 billion a month in asset purchases.

"The FOMC statement should provide clues on whether a move in December is still possible. We believe that it is unlikely given the economic impact of the US government shutdown and the reliably of October data," Lien said.

"Therefore if the statement contains more skepticism or hesitation, the dollar could resume its slide, pushing many of the major currency pairs to new highs."

The dollar edged up to 0.8925 Swiss franc from 0.8924 franc Thursday.

The pound fell to USD 1.6168 from USD 1.6198.



AFP

First Published: Saturday, October 26, 2013, 10:10


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