CURRENCIES: Central-bank Moves In Europe Color Dollar Trading
By Nick Godt
The dollar fell against the Japanese yen while rising against the euro
Thursday, with foreign-exchange traders playing off the European Central Bank's
decision to leave interest rates unchanged and the Bank of England's move to
boost its quantitative-easing program.
The dollar index (DXY), which measures the greenback against a basket of six
major currencies, stood at 75.753, down from 76.682 late Wednesday.
With stocks on Wall Street rallying amid upbeat U.S. economic data, pressure
to sell the dollar remained in place. On Wednesday, the Federal Reserve
maintained its pledge to keep interest rates low for the foreseeable future.
"Ahead of the G20 meeting, policy officials appear to be going out of their
way to reassure markets that stimulus packages will remain in place until a
sustainable recovery has been assured," said BNP Paribas in a note. Finance
ministers and central bankers of the Group of 20 nations are scheduled to meet
Friday and Saturday in St. Andrews, Scotland.
The dollar's drop against the yen picked up a little steam after the U.S.
government said claims for unemployment benefits fell in the latest week, while
productivity in the leading global economy rose more than expected in the third
quarter.
The dollar bought 90.54 yen, down 0.3% on the day.
Meanwhile, the British pound first gained some ground before trading little
changed against the dollar, after the Bank of England's decision to expand its
quantitative-easing program by 25 billion pounds.
Some in the market had expected a bigger expansion of the program that buys up
gilts and other assets. Interest rates in the U.K. were kept at a record low of
0.5%.
The pound (CUR_GBPUSD) rose 0.1% to stand at $1.6564.
Also Thursday, the European Central Bank kept its benchmark rates unchanged at
1%, as had been widely expected it would.
Speaking at a news conference after the decision, ECB president Jean-Claude
Trichet said that risks to the outlook are "broadly" balanced and that he
believes inflation expectations are firmly anchored.
The euro gained a bit of ground against the dollar, rising to $1.4880 after
having been in negative territory earlier in the European trading session.
The euro fell to $1.4860, down slightly from $1.4871 late Wednesday.
On Wednesday, the dollar lost some ground against major counterparts after the
Fed left rates unchanged near zero and affirmed its commitment to exceptionally
low rates as the U.S. economy seeks to stage a recovery.
(END) Dow Jones Newswires
11-05-091321ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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