The greenback advanced against most of its peers as investors continue to speculate that the US Federal Reserve (Fed) will reduce its bond purchases further at its next meeting scheduled for January 28-19, after data released showed signs that the world’s biggest economy is growing at a slow pace.
Meanwhile the Japanese yen is rising towards its biggest weekly advance in five-months, while the demand for Japanese assets were driven by the increased scrutiny of credit risks in China’s coal-mining industry.
The Australian dollar dropped to its lowest level against the greenback since July 2010. Following the comments from Heather Ridout, Reserve Bank of Australia (RBA) board member.
A report released yesterday revealed the figures for people in the US receiving unemployment benefits increased higher than expected.
The US dollar rose 0.1% higher to $1.3682 per euro; it also gained 0.1% to 103.37 yen. The Japanese yen remained unchanged at 141.44 against the 18-bloc currency.
The Australian dollar slid 0.7% lower to $87.07 after reaching 86.89, the lowest in three and a half years.
Fed- Taper Speculations
Market analysts are predicting members of the Federal Open Market Committee will reduce its monthly bond purchases by $10 billion at every meeting to end the stimulus program by December year. The Federal Open Market Committee (FOMC) next policy meeting scheduled for January 28-29.
The figures for people in the US receiving unemployment benefits unexpectedly increased to 3.06 million in the period ended January 11, the most since July, reports from the Department of Labour confirmed yesterday. Analysts forecasted a decline of 2.9 million after the Labour Department data revealed the economy added 74,000 jobs in December.
Yen
This year, the Japanese currency was the best performer; climbing 1.9% higher against the US dollar. Following the 18% drop in 2013, the worst among a basket of 10 of its major peers.
“We have come quite a ways higher in dollar-yen,” Citigroup’s Elmer said. “It doesn’t seem exaggerated to me that we would see a flush-out of positions close to a big figure, but I don’t think that shifts the trend,” he added.
AUD & RBA Comments
The Australian currency dropped to a three-and-a-half-year low on Friday, after an external board member commented on the currency.
External board member of the Reserve Bank of Australia, Heather Ridout said she sees the Australian dollar dropping lower to help re-balance the Australian economy from slowdown. The Aussie was dragged lower by the comments made and the downbeat Chinese manufacturing data.
The Australian dollar slid 0.7% lower to $87.07 after reaching 86.89, the lowest in three and a half years.
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