Federal Reserve QE keeps the dollar under pressure

Published: 25 Oct at 9 AM Tags: Euro, Dollar,

The US dollar continues to remain under pressure because of expectations that the Federal Reserve will not begin to scale back its asset purchase programme before the beginning of next year at the earliest. The greenback is close to its lowest level in two years against the euro. The single currency is currently steady at $1.3802, not far off Thursday’s high of $1.3825.

However, the dollar has managed to creep up slightly on the yen and is trading at 97.39 yen, a rise of 0.1 per cent. Against other major currencies the dollar has remained relatively flat. The dollar index currently stands at 79.189, which is not far off an earlier dip to 97.081, its lowest level in nearly nine months.

Disappointing job figures coming from the US have all but evaporated any chance that the Fed will decide to scale back on quantitative easing before the close of 2013.

In Japan, the latest data indicates that the Bank of Japan’s own QE measures are succeeding in helping the country’s economy avoid deflation. However, the central bank still has a long way to go before hitting its two per cent inflation target.

Although the Federal Reserve is due to meet next week, most analysts are betting that any scaling back on bond purchasing will not happen before March next year.