Reuters: US Dollar Report: FOREX-Dollar hits 3-wk lows after Fed says ready to act if needed

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Dollar hits 3-wk lows after Fed says ready to act if needed Apr 26th 2012, 08:26 Thu Apr 26, 2012 4:26am EDT * Dollar drops to 3-week lows vs basket of currencies * Yen keeps eye on BOJ policy meeting on Friday * Canadian dollar, sterling hits fresh 7-month peak By Anirban Nag LONDON, April 26 (Reuters) - The dollar fell to a three-week low against a basket of major currencies on Thursday after the Federal Reserve said it was ready to launch another round of bond buying if the U.S. economy weakens. The dollar's weakness boosted the Canadian dollar and pushed the British pound to a seven month high against the U.S. currency, a s the central banks of Canada and Britian, in contrast to the Fed, are seen moving away from further stimulus. A tightening of peripheral euro zone spreads lifted the euro, but with debt problems still brewing large and the threat of a recession and political instability hanging over the euro zone, the common currency was unlikely to break above its recent highs, analysts said. The dollar index was at 78.849, having fallen as low as 78.823 its lowest since early April. The U.S. currency is expected to continue to struggle after Fed Chairman Ben Bernanke said the central bank would not hesitate to resume asset purchases if necessary and could be spurred into taking action if the U.S. unemployment rate failed to keep falling. The Fed's bond buying programme is negative for the dollar as it boosts supply of the currency. "The key takeaway from the Fed is that they are still worried about unemployment and Bernanke will not raise rates until 2014. So the dollar stays soft," said Geoff Kendrick, currency strategist at Nomura. Fresh projections released by the Fed also showed that support for a rate hike before 2014 among policymakers did not increase from January, disappointing dollar bulls who had hoped for the possibility of an earlier exit from easy policy. The dollar's fall saw the euro hit a three-week high of $1.32635, breaking just above major resistance around $1.3240, which is a 50 percent retracement of its decline from late February to April 16. A decisive break of that level could bring into focus a band of resistance at $1.3370/90 seen in late March and early April. Debt yields of Spain, France and Italy eased, although most traders were cautious ahead of an Italian debt auction on Friday. BOJ EASING The dollar also eased 0.1 percent against the yen to 81.17 yen, though it stayed in a 80.30/81.80 range seen in the past few sessions ahead of the BOJ's policy meeting on Friday. The Japanese currency is unlikely to make much headway ahead of the meeting. Sources familiar with the central bank's thinking, said the BOJ is likely to ease monetary policy on Friday by boosting asset purchases by up to 10 trillion yen ($123 billion). Some traders feel the market is already heavily short the yen as further BOJ easing has been hyped in the market for many weeks and there is room for the yen to rebound. But others say the BOJ is likely to stay under pressure to ease even after Friday's meeting. "I think there is very little scope for the BOJ to spring a surprise by announcing a much larger (amount) than what the market is expecting," said Steve Barrow, head of G-10 currency research at Standard Bank. "I don't expect the yen to react much if the BOJ announces what has already been pretty well telegraphed." While the Bank of Japan which is easing policy to beat deflation, the Bank of Canada last week signaled it may withdraw stimulus and minutes of the Bank of England's policy meeting also suggested another asset purchase is no longer on the horizon as inflation was sticky. The Canadian dollar extended its rally to hit a fresh seven-month peak against the greenback, with the U.S. dollar falling as far as C$0.9806. Sterling rose to a 7-1/2 month high at $1.6208 as the impact of the Fed's comments on the dollar overshadowed data on Wednesday showing Britain's economy had fallen into recession. Meanwhile, the New Zealand dollar was flat at $0.8170 , having eased earlier, after central bank Governor Alan Bollard said the local dollar was still high despite recent falls in commodity prices, and warned that would influence future policy. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions