Sun, Feb 24, 2013 - Page 15 News List

US dollar gains following publication of minutes

Bloomberg

The US dollar gained versus the majority of its 16 most-traded peers after minutes from the US Federal Reserve’s last meeting showed several officials favored varying the pace of bond purchases, which debase the currency.

The euro touched its lowest level in six weeks versus the greenback after an industry report showed services and manufacturing in the region shrank at a faster pace this month than economists forecast. The yen appreciated against all but one major counterpart after Japanese Finance Minister Taro Aso said the Japanese government would not buy foreign bonds to end deflation. Automatic spending cuts known as sequestration will take effect on March 1 if the US Congress does not act.

“A big reason why the US dollar performed well this week is linked to the Fed minutes, which gave the signal that they could slow the amount of purchases in the near future,” Charles St-Arnaud, a currency strategist in New York at Nomura Holdings Inc, said on Friday in a telephone interview. “It caught a lot of market participants off-guard.”

The dollar rose 1.2 percent to US$1.3194 per euro this week after touching US$1.3145, its strongest level since Jan. 10.

The greenback fell 0.1 percent to ¥93.42. The Japanese currency gained 1.4 percent to ¥123.22 per euro after appreciating to ¥122.26, its strongest level since Jan. 29.

The pound fell for a second week, with the loss widening late on Friday after Britain lost its top credit rating by Moody’s Investors Service, which cited the continuing weakness in the nation’s growth outlook and the challenges that presents to the government’s fiscal consolidation program.

Sterling fell 2.3 percent to US$1.5163 after sliding to US$1.5132, the lowest since July 2010.

The Australian dollar was the biggest winner among the most-traded currencies this week, and Norway’s krone dropped the most.

The US dollar appreciated 1.9 percent this year among 10 developed-market currencies tracked by Bloomberg Correlation- Weighted Indexes.

The euro gained 2 percent, and the yen fell 6.2 percent to lead decliners.

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