ECB Eases Tensions, Sends Dollar Lower
The US dollar was weaker today against most major peers after the European Central Bank eased the risk aversion sentiment on the Forex market as it kept its policy unchanged and reiterated the plan to start buying short-term sovereign bonds. The US currency was little changed versus the Japanese yen.
ECB President Mario Draghi left the main interest rate at 0.75 percent and repeated that the central bank is ready to start the bond buying program known as the Outright Monetary Transactions. The program involves buying government bonds maturing in one to three years on secondary markets. There was nothing particularly new in the statement, but traders were happy to hear that the plan remains in place and used it as an excuse to embark on riskier trades.
The Federal Reserve released its minutes today, confirming that the vast majority of policy makers prefer to maintain accommodative policy. The dollar reacted in an unexpected way, jumping after the release of the minutes, though gains were not big and the greenback remained weak.
EUR/USD climbed from 1.2904 to 1.3017 and GBP/USD soared from 1.6074 to 1.6189 as of 20:57 GMT today. USD/JPY stayed near the opening of 78.47, while its daily high of 78.70 was the highest since September 19.
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Earlier News About the US Dollar:
- US Dollar Gains on Demand, ADP Report (2012-10-03)
- Bernanke Erodes Dollar's Strength (2012-10-02)
- US Dollar Mixed as Forex Traders Await Direction (2012-10-01)
- US Dollar Pulls Back on Renewed Risk Appetite (2012-09-27)
- US Dollar Gains as Global Economic Fears Return to Focus (2012-09-24)