Dollar Weakens as Fed Keeps Pace of Asset Purchases; Yen Slides The U.S. currency weakened, pushing the Bloomberg Dollar Index toward the lowest level in seven months, after the Federal Reserve unexpectedly kept the current pace of asset purchases that tend to debase the greenback. The dollar traded near a seven-month low against the euro after policy makers maintained the U.S. central bank’s program to buy $85 billion a month of mortgage-backed securities and government debt, known as quantitative easing or QE, compared with a forecast by economists surveyed by Bloomberg News for a $5 billion reduction in Treasury purchases. The yen maintained losses versus most major counterparts after a government report today showed Japan had a trade deficit for a 14th month. “The Fed statement was noticeably dovish, causing dollar selling,” said Yuki Sakasai, a foreign-exchange strategist in New York at Barclays Plc. “There is expectation that there may more QE.” The Bloomberg Dollar Index fell 0.1 percent to 1,006.97 as of 11:33 a.m. in Tokyo, set for the lowest close since Feb. 19. The dollar was little changed at $1.3528 per euro after touching $1.3542 yesterday, the weakest since Feb. 7. It gained 0.3 percent to 98.19 yen after falling as much as 1.4 percent yesterday to 97.76, the lowest since Aug. 29. Japan’s currency slid 0.3 percent to 132.86 per euro. “Conditions in the job market today are still far from what all of us would like to see,” Fed Chairman Ben S. Bernanke said at a press conference yesterday in Washington after a two-day meeting of the Federal Open Market Committee. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.” The central bank left unchanged its outlook that its target interest rate will remain near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent, according to a statement. The dollar slid 1.9 percent in the past week, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen lost 0.4 percent and the euro was little changed. The yen weakened today against the dollar after climbing yesterday to a three-week high. “The yen is being pushed into an area by external factors and that is probably going to weigh on the economy,” said Andrew Salter, a Sydney-based currency strategist at Australia & New Zealand Banking Group Ltd. Japan Trade Japan’s Ministry of Finance said the nation had a trade deficit of 960 billion yen ($9.8 billion) in August, compared with the median estimate for a 1.11 trillion yen shortfall by economists polled by Bloomberg. Exports rose 14.7 percent from a year earlier, the sixth straight increase, while imports climbed 16 percent. The world’s third-biggest economy last recorded a surplus in June 2012. In New Zealand, a report showed gross domestic product grew 2.5 percent in the three months through June 30 from a year earlier, beating the median forecast of 2.3 percent in a Bloomberg survey. The kiwi climbed 0.4 percent to 84.05 U.S. cents after touching 84.13 cents, the highest since May 10. The currency’s 14-day relative strength index climbed to 77, above the 70 level that signals to some traders an asset has risen too far, too fast and may be due to reverse course.
Posted on: Thu, 19 Sep 2013 03:41:47 +0000