Thursday in Asia, the U.S. dollar plummeted against other major currencies on increasing expectations that the Federal Reserve will conduct further monetary easing soon to boost the economy.
The dollar slumped to a fresh 15-year low against the yen, new record low against the franc, more than a 2-year low against the NZ dollar, 5-1/2-month low against the Canadian dollar, 28-year low against the Aussie, 1-week low against the pound and a fresh 8-1/2 -month low against the euro.
Those hopes were reinforced this week with the release of the minutes of the last meeting of the Federal Open Market Committee, on September 21, which showed a growing consensus among Fed policy-makers for further stimulus.
Selling in the dollar accelerated in Asian deals today after the Monetary Authority of Singapore surprisingly decided to tighten its monetary policy by allowing its currency to appreciate at a “slightly” faster pace to curb inflation.
MAS said the slope of the policy band will be “increased slightly, with no change to the level at which the band is centered,” implying that it will allow a faster appreciation of the Singapore dollar.
Rising stock and commodities price also weakened the U.S. currency.
New York’s main contract, light sweet crude for November delivery, gained 71 cents to 83.72 dollars a barrel in Asian trade today.
Meanwhile, spot gold rose to a fresh all-time high at $1,376.95 an ounce. U.S. gold futures for December delivery also hit a new record high at $1,377.9.
The dollar, which closed yesterday’s trading at 81.80 against the yen lost 0.7% in early Asian deals on Thursday and fell to a fresh 15-year low of 81.26. If the dollar weakens further, it may likely target the 79.7 level.
The yen has been broadly higher against the dollar this year, having surged up to its highest level since 1995, as low U.S. interest rates have made the dollar cheap to borrow and sell with higher-yielding assets, bringing the Japanese currency closer to its record peak of 79.75 per dollar set in 1995.
Europe’s sovereign debt crisis and a slowdown in the U.S. economic recovery also boosted demand for the relative safety of the Japanese currency this year.
The yen’s rise to a fresh 15-year high against the dollar increased speculation today that the Bank of Japan may intervene again to stem the currency’s surge.
The Japanese currency’s advance hurt companies’ profits and confidence, the BOJ’s Shirakawa told in parliament yesterday, adding that the bank will keep monitoring the currency market “with great interest.”
Last month, Japan intervened in the currency market for the first time since early 2004 to stem the yen’s surge against the dollar that threaten a fragile economic recovery.
Central banks intervene in the foreign exchange market when they buy or sell currencies to influence exchange rates.
During Asian deals on Thursday, the dollar slipped to a fresh 8-1/2 – month low of 1.4095 against the euro. This was down 0.9% from yesterday’s closing value of 1.3963. If the dollar slides further, 1.420 is seen as the next target level.
The European common currency has found support in the contrast between the likelihood of more quantitative easing in the U.S. and the euro zone’s readiness to end extraordinary support measures.
The dollar has depreciated 16% against the euro after it reached more than a 4-year high of 1.1878 in June this year as strong equities and signs of global economic recovery spurred demand for higher-yielding assets.
The dollar plunged to a 1-week low of 1.5996 against the pound in Asian deals on Thursday. The next downside target level for the dollar is seen at 1.602. At yesterday’s close, the pound-dollar pair was quoted at 1.5899.
The greenback that gained early in the week dropped on Tuesday after the Federal Reserve indicated that it would ease monetary measures soon.
The dollar thus lost 1.5% against the pound from an 8-day high of 1.5758 hit on Tuesday.
In Asian deals on Thursday, the dollar tumbled to a fresh record low of 0.9488 against the Swiss franc. This was down 1% from yesterday’s close 0.9586.
The dollar that jumped to more than 1-year high of 1.1733 against the franc in June this year has plunged 19% thus far.
The U.S. currency plummeted to a fresh 28-year low of 0.9985 against the Australian dollar in Asian deals on Thursday. If the dollar drops further, it may reach parity with the aussie. The aussie-greenback pair closed yesterday’s trading at 0.9905.
After surging up to a 10-month high of 0.8069 in May this year, the greenback has weakened 19% against the aussie.
During Asian session on Thursday, the U.S. dollar slumped to a fresh 5-1/2 – month low of 1.0003 against the Canadian dollar. The next downside target level for the greenback is seen at 0.993. At yesterday’s close, the greenback-loonie pair was quoted at 1.0037.
The U.S. dollar that strengthened to 0.7567 against the New Zealand dollar in early Thursday Asian deals on NZ retail sales data pared its gains shortly. The greenback dropped to more than a 2-year low of 0.7645 against the kiwi at 9:55 pm ET. As of now, the kiwi-greenback pair is worth 0.7635. On the downside, 0.780 is seen as the next target level for the greenback.
During Asian session on Thursday, the U.S. dollar slumped to a fresh 5-1/2 – month low of 1.0003 against the Canadian dollar. The next downside target level for the greenback is seen at 0.993. At yesterday’s close, the greenback-loonie pair was quoted at 1.0037.
Looking ahead, the European Central Bank’s monthly report and the German economic institutes bi-annual group forecast are expected in the upcoming European session.
The U.S. weekly jobless claims data for the week ended October 09 and the PPI and trade balance reports for September are slated for release in the New York morning.
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