U.S. dollar tumbles against euro

U.S. dollar tumbles against euro

The U.S. dollar dropped to its lowest mark in eight months versus the euro amid reports that the Federal Reserve may announce this week that it is adding government debt purchases to support a slow economic recovery.

Meanwhile, the dollar also fell to a 15-year low against the yen following the latest Labor Department better-than-expected jobs report, and ahead of tomorrow’s release of the minutes of the September 21 Fed policy meeting.

The euro rose versus 13 out of 16 currencies as Asian stocks and commodities surged justifying demand for risk-taking.

“It seems really likely that the Fed will go ahead” with its plan for quantitative easing, said Sean Callow, senior currency strategist at Sydney-based Westpac Banking Corp. “It’s a weak dollar undertow.”

The dollar fell to $1.3970 per euro as of 10:20 a.m. in Tokyo from $1.3939 in New York trading on October 8. The greenback declined to $1.4029 the previous day, hitting its lowest mark since late January, while it fell to 81.39 yen, its weakest performance against the Japanese currency since April 2005.

The latest employment report showed that 95,000 jobs were cut in September after 57,000 lost jobs in August, and the unemployment rate surprisingly held steady at 9.6 percent.

“Many are now concluding that the Fed will do more quantitative easing,” said Peter Jolly, head of market research at National Australia Bank’s investment banking unit. “The other deliberate aspect to this policy is to increase the amount of dollars in circulation, and hence, lower the external value of the dollar.”

Posted by James Fried on Monday October 11 2010, 7:53 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0