Dollar down on doubts about Fed stimulus plans

Published: 12 Sep at 9 AM Tags: Euro, Dollar,

The US dollar has hit its lowest level in two weeks as doubts hang over whether the Federal Reserve will go ahead with plans to slash its massive monetary stimulus operation next week. The dollar index, a measure of the US currency against a basket of other major currencies, dropped to 81.518. Doubts that the Fed will taper its easy money programme have been in the air since last Friday’s disappointing nonfarm payrolls figures.

The weakened dollar has helped the euro to recover to $1.3325, its highest level since the end of August. Although the dollar is slightly down against the yen, the Japanese safe-haven currency continues to remain under pressure because of a risk appetite buoyed by the US stalling on any decisive action concerning Syria.

The dollar has dropped back from 100.62 yen to 99.92 yen, but is still up this week by 0.8 per cent. A recent rally by the euro against the yen appears to have stalled. The single currency is currently worth 132.94 having previously hit a high of 133.37 yen.

Elsewhere it has been good news for commodity currencies with the New Zealand dollar bouncing off news that interest rates are likely to rise in the New Year. The Kiwi is currently trading at $0.8137, its highest level in nearly four weeks.

The Aussie dollar, doing well after reports that China’s economy is on a firm footing, may edge up further if jobs data, due out shortly, is positive.