During early Asian deals on Wednesday, the U.S. dollar has been extending its yesterday’s fall against most major currencies as the Federal Reserve held rates steady and hinted at the possibility of further quantitative easing if needed to support the economic recovery.
The Federal Reserve’s Federal Open Market Committee voted Tuesday to continue to maintain interest rates at near zero levels, keeping the target range for its federal funds rate at zero to 0.25 percent.
The central bank did not announce more quantitative easing, but signaled it may be compelled to undertake further asset purchases by year’s end.
“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Fed said, opening the door to QE in the medium term.
The Fed once again acknowledged that the pace of the economic recovery is slowing, with stubborn weakness in the jobs market bleeding into other segments of the economy, particularly housing and consumer spending. It also noted that employers remain reluctant to add to payroll and that housing starts are at a depressed level.
The U.S. dollar declined against the British pound in early Asian deals on Wednesday. As of now, the dollar is trading at a 2-day low of 1.5668 against the pound with 1.573 seen as the next downside target level. At yesterday’s close, the pound-dollar pair was quoted at 1.5617.
During early Asian deals on Wednesday, the U.S. dollar slipped to near a 7-week low of 1.3313 against the euro and a 1-week low of 0.9959 against the Swiss franc. If the dollar drops further, it may likely target 1.333 against the euro and 0.994 against the franc. The euro-dollar and the dollar-franc pairs were worth 1.3260 and 0.9968, respectively at yesterday’s close.
The U.S. dollar, which closed yesterday’s trading at 85.11 against the Japanese yen dropped to a 1-week low of 84.79 in early Asian session on Wednesday. The next downside target level for the dollar is seen at 83.4.
The dollar’s slide below the 85.0 level against the yen spurred speculation today that Japanese authorities may intervene to curb yen gains after they resumed intervention for the first time since 2004 last week.
In early Asian deals on Wednesday, the U.S. dollar slumped to a fresh 2-year low of 0.9585 against the Australian dollar and an 8-day low of 0.7383 against the New Zealand dollar. If the greenback falls further, it may likely target 0.985 against the aussie and 0.740 against the kiwi. The aussie-greenback pair closed yesterday’s trading at 0.9545 against the kiwi-greenback pair at 0.7343.
Looking ahead, the Bank of England’s September meeting minutes and the Eurozone July industrial new orders data are expected in the upcoming European session.
From U.S., the Federal House Finance Agency-FHFA is set to release its house price index for July at 10 am ET.
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