| CATEGORY: FX |
Thu 02 Aug 2012
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LONDON (SHARECAST) - The dollar advanced against major currencies on Wednesday as the Federal Reserve held back from announcing new stimulus measures to stimulate the US economy.
At the conclusion of its two-day meeting the Fed said it remained disappointed with the slow progress of bringing down the nation's jobless rate, which currently stands at 8.2 per cent.
While the central bank indicated that it would take necessary action, if needed, hopes that new measures would be announced on Wednesday were dashed. The Fed also downgraded its US economic outlook.
The dollar index, which measures the greenback against a basket of six other currencies, climbed to 83.070 from 82.619 on Tuesday.
The dollar index had risen sharply after figures from ADP showed private-sector payrolls rose 163,000 in July, ahead of the 120,000 increase pencilled in by economists. However momentum for the dollar index later faded.
The dollar rose 0.4% against the Japanese yen to buy ¥78.42 following the conclusion of the Fed meeting.
One day ahead of the European Central Bank's monthly policy, the euro lost ground against the dollar. The ECB is widely expected to keep its main lending rate unchanged at 0.75%.
Last week ECB President Mario Draghi increased hopes that the central bank could resume its bond purchase programme, to help lower borrowing rates in Spain and Italy, after his comments that he would do everything necessary to preserve the euro.
The British pound eased to $1.5552 from $1.5682 in the previous session after a disappointing economic data and ahead of the Bank of England's monthly rate decision meeting.
The latest data showed UK manufacturing production fell at its fastest rate in over two years in July, after heavy declines in output and new orders.
Separately figures from Nationwide showed British house prices fell at their fastest annual rate in nearly three years last month.
CJ
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