Dollar hits 15-month low, stocks firm on rate view
11 Nov 2009, 1518 hrs REUTERS
LONDON: The dollar hit a fresh 15-month low and world stocks held near a three-week high on Wednesday after remarks from Federal Reserve
officials reinforced the view that US interest rates will remain near zero for some time.
Top Fed officials said in a string of speeches on Tuesday that high unemployment and reluctant consumers would likely make a US economic recovery weak and erratic.
Data on Friday showed that the US jobless hit 10.2 per cent in October, its highest since 1983. The prospect of near-zero interest rates persisting has prompted investors to sell dollars for higher-yielding currencies, such as the Australian dollar, while keeping alive the momentum for a risk asset rally.
"Market volatility may remain high but I continue to believe we will see significant new highs across the board before the year-end," said Stephen Jen, managing director of macroeconomics and currencies at Bluegold Capital Management.
"The Fed will not be in a hurry to tighten. With incremental growth both in the US and the rest of the world being positive, and if the Fed remains easy, I believe risk assets will continue to rally."
The dollar index, which measures its strength against major currencies, fell to 74.806, while the euro rose 0.3 per cent to a two-week high of $1.5043. The Australian dollar hit a 15-month high of AU$0.9345. The country's central bank raised its main interest rate by 25 basis points to 3.5 per cent last week, the second hike in as many months.
11 Nov 2009, 1518 hrs REUTERS
LONDON: The dollar hit a fresh 15-month low and world stocks held near a three-week high on Wednesday after remarks from Federal Reserve
officials reinforced the view that US interest rates will remain near zero for some time.
Top Fed officials said in a string of speeches on Tuesday that high unemployment and reluctant consumers would likely make a US economic recovery weak and erratic.
Data on Friday showed that the US jobless hit 10.2 per cent in October, its highest since 1983. The prospect of near-zero interest rates persisting has prompted investors to sell dollars for higher-yielding currencies, such as the Australian dollar, while keeping alive the momentum for a risk asset rally.
"Market volatility may remain high but I continue to believe we will see significant new highs across the board before the year-end," said Stephen Jen, managing director of macroeconomics and currencies at Bluegold Capital Management.
"The Fed will not be in a hurry to tighten. With incremental growth both in the US and the rest of the world being positive, and if the Fed remains easy, I believe risk assets will continue to rally."
The dollar index, which measures its strength against major currencies, fell to 74.806, while the euro rose 0.3 per cent to a two-week high of $1.5043. The Australian dollar hit a 15-month high of AU$0.9345. The country's central bank raised its main interest rate by 25 basis points to 3.5 per cent last week, the second hike in as many months.
