17-September-2013 Dollar Falls As Summers Quits Fed Race : The U.S. dollar fell against a host of other major currencies on Monday after news broke that former U.S. Treasury Secretary, Lawrence Summers had bowed out of the race to become the next chairman of the Federal Reserve. Summers’ who was rumored to be the Presidents favored choice for the Fed chair, withdrew from the running to succeed current incumbent Ben Bernanke, citing concerns that any confirmation process for him was likely to be “acrimonious”, due to comments he made when he was president of Harvard University. At a conference in 2005 Summers suggested that women had less innate ability in maths and science than men. The dollar was weakened by the news, since Summers’ was perceived as being likely to unwind economic stimulus measures more aggressively than his main rival for the post, current Fed Vice Chairwoman, Janet Yellen. The news comes at the start of a hectic week for the dollar, as investors await the outcome of the Fed’s policy meeting, which concludes Wednesday. It is widely believed the Fed will announce the unwinding of its $85 billion-a-month bond buying program after the meeting. In other economic news, official data showed that the Empire State manufacturing index unexpectedly fell to a four-month low of 6.29 in September from a reading of 8.24 in August. Analysts had expected it to rise to 9.2. It wasn’t all bad news however, official data showed that U.S. industrial production rose 0.4% in August, in line with expectations after remaining flat the previous month. During the U.S. session, the dollar fell against the yen, with USD/JPY losing 0.52% at 98.84. In Europe, ECB President Mario Draghi told a group of reporters in Berlin, that the economic recovery in the eurozone remains “fragile” and reiterated that interest rates will remain at current or lower levels for an “extended period”. The euro climbed to a three-week high against the dollar during the U.S. session, with EUR/USD climbing 0.39% to 1.3338. The pound was also higher, with GBP/USD advancing 0.16% to 1.5904. Elsewhere, the greenback was sharply lower against the commodity currencies. With the Australian dollar reaching a three month high against the dollar. AUD/USD climbing 0.69% closing at 0.9310. The Canadian dollar was also boosted after Summers’ announcement. USD/CAD fell 0.31% closing at 1.0323. More coverage of today’s top story. Marc Chandler: The end of Summers excites animal spirits. – News that Lawrence Summers withdrew from what turned into a bit of a contest to replace Bernanke as Chairman of the Federal Reserve has sparked a risk-on rally. Without a cash market, due to the Tokyo holiday, US Treasury futures rallied strongly and U.S. stocks traded higher electronically, helping lift emerging market assets as well. FT: Lawrence Summers’ exit from Fed race sparks a relief rally. – Lawrence Summers’ abrupt exit from the race to chair the US central bank has sparked a relief rally in Asia and Europe. But strains created by the looming tapering of Federal Reserve stimulus and the weakness of many domestic economies raise questions over the sustainability of the gains, according to analysts. More Top Stories: Tim Clayton: Dollar slides as Summers is out – Calling Bernanke? – The dollar has been undermined sharply by the decision of Summers to withdraw from the Fed Chairman’s race with EUR/USD spiking to over 1.3350 in the dead-zone ahead of the retail open and remaining under pressure. The principal casualty of this affair will be President Obama who has endured a disastrous month, first over Syria and now the Fed Chairmanship. Dean Popplewell: End of Summers cools the dollar. – Capital markets have been agitated for a long time by the uncertainty of where the Fed will go next with its monetary policy. When all is said and done, this market is probably not expecting much from the FOMC meet this week. Bloomberg: Yen may plummet to infinity as policies diverge, Axel Merk says. – The yen may weaken to “infinity” versus the dollar as central bank policies in Japan and the U.S. diverge, according to Axel Merk of Merk Investments LLC. Bloomberg: Canada dollar gains as Summers Fed withdrawal boosts risk assets. – The Canadian dollar increased to its strongest level in a month amid speculation that the U.S. Federal Reserve won’t put an early end to its expansionary monetary policy, boosting riskier assets. The Australian: Aussie dollar’s rally a challenge to Abbott, RBA. – A RESURGENT Australian dollar will put pressure on the Reserve Bank and the new Abbott government as they confront a challenging economic turnaround. Australian Times: Aussie dollar turnaround hits three-month high against Greenback. – The Australian Dollar’s positive run over the past few weeks has seen it crawl back from dismal winter figures. After numerous yearly lows and even lower business confidence the Aussie has now set the stage for an emphatic comeback. WSJ: New Zealand dollar up on broad U.S. dollar weakness. – The New Zealand dollar rose against its U.S. counterpart on Monday, driven by the broad weakness in the greenback after news former U.S. Treasury Secretary Lawrence Summers withdrew his name from candidacy to replace Federal Reserve chairman Ben Bernanke. Investing: EUR/USD near 3-week highs in risk-on trade. – The euro was trading close to three-week highs against the dollar on Monday after former U.S. Treasury Secretary Larry Summers withdrew from the contest to be the next head of the Federal Reserve. Bloomberg: Gold bulls cut wagers as Goldman sees more losses. – Speculators got less bullish on gold, selling long contracts at the fastest pace this year as prices fell the most in almost three months on prospects for less central-bank stimulus. Goldman Sachs Group Inc. said the retreat has further to go. Investing: Gold prices gains as Summers bows out of Fed race, eyes Fed meet. – Gold prices rose on Monday after former U.S. Treasury Secretary Larry Summers dropped out of the race to replace Ben Bernanke as head of the Federal Reserve, though sentiments U.S. monetary stimulus measures will scale back soon capped gains.
Posted on: Mon, 23 Sep 2013 13:43:16 +0000