Forex Market Update: Dollar Index Hovers Near Nine-Month Low Level
The dollar index hovered near its multi-month low level on Wednesday as investors remained reluctant to take positive bets on the currency amid growing perception that the Federal Reserve will extend or even expand its bond purchase program following an unexpectedly weak non-farm payrolls data release on Tuesday.
The dollar Index, which plunged to its nine-month low on Tuesday, was down 0.09% to 79.20.
On Tuesday, the Labor Department’s non-farm payrolls report showed that the U.S. economy added mere 148,000 net payrolls in September. Economists had expected 180,000 net payrolls additions. The Fed’s current $85 billion worth monthly bond purchase program is explicitly tied to an improvement in the Job market.
Although the minutes from the Fed’s latest open market committee meeting showed that most policymakers were in favor of tapering the asset purchase program before the year end, economists now anticipate the QE3 will be extended at least until March 2014 due to debt-ceiling uncertainty and weakness in labor market.
“The weaker-than-expected payrolls report certainly supports investors’ expectations that the Fed is likely to delay tapering quantitative easing into at least the first quarter of next year,” said Lee Hardman, currency economist at BTMU, according to Reuters.
Against the yen, the dollar fell sharply on Wednesday as market participants took safety in the Japanese currency, which is regarded as the most liquid currency in times of uncertainty, after a report from China showed that biggest lenders in China wrote-off $3.7 billion in bad debts during first six months of the year.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |