September 14, 2012 / 1:42 PM / 5 years ago

FOREX-Dollar hits 4-month low vs euro on Fed action, ECB

* Euro seen extending rally to $1.35-1.36
    * Yen falls on anxiety about intervention

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 14 (Reuters) - The dollar fell against most
currencies on Friday, hitting a four-month low versus the euro,
a day after the Federal Reserve announced a fresh round of
monetary stimulus to boost a still lackluster U.S. economy.
    Despite the move away from the safe-haven dollar, the yen
fell broadly on speculation Japanese authorities could intervene
to cap its recent gains against the dollar. Expectations that
the Bank of Japan could ease policy next week in response to the
Fed's action will also likely undermine the yen, some traders
said.
    The dollar rose 0.9 percent against the yen to 78.15 yen
.
    Commodity currencies including the Australian and Canadian
dollars also rallied against the greenback, pushing the dollar
index to 78.729, its lowest level in more than four
months.
    Some market players said the Fed's announcement on Thursday
that it will pump $40 billion a month into the U.S. economy
until the jobs market shows a sustained upturn, along with the
European Central Bank's plan agreed last week to lower
peripheral euro zone borrowing costs, could see an the euro
extend its rally toward $1.35 in the near term.
    "Recent moves by both the Fed and the ECB to bolster growth
have helped usher in a wave of risk-taking which has seen demand
for lower-yielding, safer investments such as the dollar
evaporate," said Joe Manimbo, senior market analyst at Western
Union Business Solutions in Washington.
    The euro hit a peak of $1.3120 and was last at
$1.3099, up 0.8 percent on the day, as a drop in peripheral bond
yields prompted investors to buy the currency. The euro rose to
an eight-month high against the Swiss franc of 1.2178 francs
 on trading platform EBS and hit a four-month high
against the yen of 102.37 yen. 
    The dollar fell to 0.9265 Swiss francs, its lowest
level since mid-May. The Australian dollar hit a
one-month high of US$1.0605 as riskier assets rallied.
    Risk-taking was also helped by better-than-expected U.S.
retail sales last month, which rose 0.9 percent, the largest
gain since February.

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