Fed pushes dollar down

Published: 19 Sep at 9 AM Tags: Euro, Dollar,

The US dollar has fallen to its lowest level in seven months following the surprise announcement that the Federal Reserve will continue with its massive $85 billion per month bond buying programmme. Most analysts expected the central bank to drop the figure by at least $10 billion.

Although bad news for the greenback, most emerging Asian currencies have been given a huge boost after suffering from expectations the Fed decision would be strict. A taste for riskier assets has pushed the yen down and helped the dollar to recover 0.5 per cent to 98.48 yen.

The euro is currently holding its own at $1.3526 after hitting its highest level since February at $1.3543.

Elsewhere, the commodity currencies are doing well. The Australian dollar lost just 0.1 per cent to end at $0.9491 after hitting an earlier $0.9530 three-month high. The New Zealand dollar is already up 0.6 per cent to $0.8393. The kiwi has been given a boost because of better than expected economic data for the second quarter.

The eyes of analysts are now on the Fed. Some believe tapering will now begin in December. The asset purchase programme will reportedly end in June. An interest rate hike is also unlikely before next year.