Dollar down as Fed puts off tapering

Published: 23 Sep at 11 AM Tags: Euro, Dollar,

Hints from a top Federal Reserve official that the central bank could begin to scale back its bond buying programme next month have helped keep the dollar off a seven-month low. The euro has also failed to gain much after elections in Germany left Angela Merkel’s conservatives failing to get enough votes to be able to rule the country alone.

The single currency managed to hit $1.3555 before dropping to $1.3528. The euro also managed to hit 134.56 yen before retreating slightly to 134.40 yen. Over the past fortnight the dollar has lost around 2 per cent as the Federal Reserve refuses to commit to pulling in its easy money policy.

The markets were placed back on guard on Friday after James Bullard said it had been narrowly decided not to taper. Other officials from the central bank are due to comment later today.

Speculation that the Reserve Bank of Australia will be forced to announce a cut in interest rates has put pressure on the Aussie dollar which has dropped from last week’s $0.9530 high back to $0.9378.

Analysts are now waiting for HSBC to publish its report on manufacturing in China to see where the Aussie will go next. China is Australia’s biggest trading partner.