News Column

US Dollar Declines Against Majors

July 9, 2014

BRUSSELS (Alliance News) - The US dollar fell against its key counterparts in early Asian deals on Thursday, in reaction of the Federal Reserve's minutes of recent monetary policy meeting showing that it would maintain its accommodative policy stance for a considerable time after the asset purchase program ends.

In minutes of June meeting released on Wednesday, the Federal Open Market Committee said "it currently anticipated that it likely would be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continued to run below the Committee's 2% longer-run goal, and provided that longer-term inflation expectations remained well anchored."

The Federal Reserve plans to completely unwind its asset purchase plan in October as long the economy continues to pick up. The FOMC has reduced bond purchases by USD10 billion at each meeting since December, and will end by cutting USD15 billion in October, it revealed.

"Participants generally agreed that if incoming information continued to support its expectation of improvement in labor market conditions and a return of inflation toward its longer-run objective, it would be appropriate to complete asset purchases with a USD15 billion reduction in the pace of purchases in order to avoid having the small, remaining level of purchases receive undue focus among investors," the minutes stated.

The greenback that closed Wednesday's trading at 101.62 against the yen slipped to 101.49. If the greenback continues its descending trend, it may find support around the 100.8 zone.

The greenback hit a weekly low of 0.8903 against the franc, down from Wednesday's closing quote of 0.8908. On the downside, 0.885 is seen as next possible support level for the greenback-franc pair.

The greenback lost 0.06% to hit a weekly low of 1.3648 against the euro from yesterday's closing value of 1.3640. The greenback is likely to eye support around the 1.37 mark.

The greenback fell to a 3-day low of 1.7167 against the pound before rebounding slightly shortly thereafter. At Wednesday's close, the pair was worth 1.7154.

The US currency drifted lower to 0.8835 against the NZ dollar, its lowest since July 2011, when it hit a record low. The pair was quoted at 0.8821 at yesterday's close.

Looking ahead, Japan consumer confidence index for June is due at 1:00 am ET.

The UK trade data for May and ECB monthly report are set for release in the European session.

At 7:00 am ET, the Bank of England will announce its interest rate decision. The interest rates are seen on hold at 0.50% and asset purchase program at 375 billion pounds.

The US weekly jobless claims for the week ended July 5 and wholesale inventories data for May, and Canada new housing price index for May are to be released in the New York session.

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Source: Alliance News

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