The U.S. dollar that largely moved sideways against most major currencies in Asian deals on Thursday weakened during early European session as stocks and commodities climbed after the Federal Reserve’s decision yesterday to provide further economic stimulus.
The Federal Reserve pledged to buy $600 billion more in government bonds by the middle of next year in an effort to jump start the floundering US economy. The move was widely expected and was mostly priced in already.
The Fed also decided to leave interest rates unchanged at a record low.
The Fed’s announcement to buy government debt came a day after frustrated Americans handed out a stunning defeat for the Democrats in the mid-term elections.
The stock markets in Asia and Europe and the commodity prices rose today on Fed’s move.
In Asia, Japan’s Nikkei 225 index rose 2.2%, Hong Kong’s Hang Seng climbed 1.6%, China’s Shangai composite index soared 1.9%, South Korea’s Kospi gained 0.3%, Taiwan’s main index soared 0.8%. Australia’s S&P 200 index and the All Ordinaries index rose 0.5% each.
In Europe, Germany’s DAX jumped 1.4% thus far, France’s CAC 40 index advanced 1.9% and U.K.’s FTSE 100 index soared 1.8%.
Crude oil jumped to near $86 a barrel today as the dollar weakened. U.S. crude for December rose 1.37% to $85.85 a barrel at 5:38 am ET.
The dollar weakened against the euro during early European deals on Thursday. As of now, the dollar is trading at 1.4241 against the euro, its lowest level since January 19, 2010. The next downside target level for the dollar is seen at 1.460. At yesterday’s close, the euro-dollar pair was quoted at 1.4137.
The final services PMI reports for October from the major European economies, which were released today likely influenced the euro.
During early European session on Thursday, the dollar slipped against the currencies of U.K. and Switzerland. At present, the dollar is trading at more than a 9-month low of 1.6197 against the pound and a 2-week low of 0.9655 against the franc, compared to yesterday’s close of 1.6083 and 0.9711, respectively. If the dollar falls further, it may likely target 1.646 against the pound and 0.956 against the franc.
Swiss inflation eased slightly to 0.2% in October from 0.3% in September, the Federal Statistical Office said today. Economists’ had expected the rate to stay unchanged at 0.3%. On a monthly basis, consumer prices grew 0.5% in October, while economists were looking for a 0.6% increase.
UK house prices rose 1.8% in October from the previous month, Lloyds Banking Group Plc’s Halifax division showed today. Economists had expected house prices to rise 0.6% after declining sharply in September.
The U.S. dollar declined against the Australian dollar during early European deals on Thursday. Currently, the greenback is trading at a fresh 28-year low of 1.0100 against the aussie with 1.020 seen as the next downside target level. The aussie-greenback pair closed yesterday’s trading at 1.0061.
In early European deals on Thursday, the U.S. dollar dropped against the New Zealand dollar. The greenback is now trading at a new 29-month low of 0.7898 against the kiwi, breaking its early Asian session’s low of 0.7888. If the greenback weakens further, it may likely target the 0.813 level. The kiwi-greenback pair was worth 0.7800 at yesterday’s close.
The NZ dollar was supported today in early Asian deals by an encouraging domestic jobs data.
Against the Canadian dollar, the U.S. currency fell in early European deals on Thursday. The greenback-loonie pair that closed yesterday’s trading at 1.0053 is now worth 1.0045. This set a 20-day low for the greenback. The next downside target level for the greenback is seen at 0.998.
Looking ahead, the Eurozone PPI for September is due at 6:00 am ET.
Investors also focus on the interest rate announcements by the Bank of England and the European Central Bank. Both banks are widely expected to maintain rates at their current levels.
The U.S. weekly jobless claims report for the week ended October 30 and the preliminary non-farm productivity data for the third quarter are expected at 8:30 am ET.