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Dollar remains under pressure on Fed tapering view

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Investing.com - " The dollar steadied against the other main currencies on Wednesday but remained under pressure after September's disappointing U.S. jobs data reinforced expectations that the Federal Reserve will maintain the current pace of its stimulus program for longer.

During European afternoon trade, the dollar was lower against the yen, with USD/JPY down 0.66% to 97.49, after falling as low as 97.16 earlier.

The Department of Labor said Tuesday the U.S. economy added 148,000 jobs in September, well below expectations for an increase of 180,000, indicating that jobs growth had slowed even before the start of the recent 16-day U.S. government shutdown.

The disappointing data cemented the view that the Fed will postpone plans to start tapering its asset purchase program until well into next year.

Elsewhere, the euro eased back from 23-month highs against the dollar as traders locked in profits following Tuesday's sharp gains, with EUR/USD slipping 0.16% to 1.3759, off highs of 1.3793.

The European Central Bank announced details of new bank stress tests on Wednesday. The review is to run over the course of a year and conclude before the ECB assumes its supervisory role over the bloc's banking sector at the end of 2014.

The dollar also pushed higher against the pound, with GBP/USD down 0.50% to 1.6154.

Earlier Wednesday, the minutes of the Bank of England's October meeting said the U.K. unemployment rate appears to be falling at a faster than expected rate as the "robust" recovery gains traction.

The bank also estimated that growth in the second half of the year would remain around 0.7% a quarter or a little higher, stronger than expected at the time of the August inflation report.

The dollar was little changed at 20-month lows against the traditional safe haven Swiss franc, with USD/CHF inching up 0.02% to 0.8946.

The greenback was sharply higher against its Australian and New Zealand counterparts, with AUD/USD dropping 0.79% to 0.9632 and NZD/USD tumbling 1.54% to 0.8383. The greenback also gained ground against the Canadian dollar, with USD/CAD advancing 0.30% to 1.0319.

Sentiment on the Australian and New Zealand dollars was hit by news that China's largest banks tripled the number of bad loan write-offs in the first half of the year, fuelling concerns over the outlook for the banking sector.

In Australia, data released on Wednesday showed that consumer price inflation rose 1.2% in the third quarter, exceeding expectations for a 0.8% increase.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.09% to 79.36.

Investors were looking ahead to the Bank of Canada's rate statement later Wednesday, as markets try to gauge when the central bank may eventually raise rates.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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