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Forex – Dollar down across the board after Fed launches QE2

Published 11/04/2010, 11:47 AM
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Investing.com – The U.S. dollar fell sharply against the other major currencies on Thursday, after the Federal Reserve announced a fresh round of asset purchases to kick-start a slow growing U.S. economy.

During European afternoon trade, the greenback was down against the euro, with EUR/USD surging 0.67% to hit 1.4236. Earlier in the day, the European Central Bank kept its benchmark interest rate unchanged at 1.00% for the 18th consecutive month in November.

The greenback was also down against the pound, with GBP/USD jumping 1.21% to hit 1.6273 after the Bank of England made no changes to its asset purchase plan and left its benchmark interest rate unchanged at 0.50% for the 21st successive month in November.

Elsewhere the greenback was lower against the Swiss franc and the yen with USD/CHF tumbling 1.02% to hit 0.9607 and USD/JPY falling 0.49% to hit 80.67. Earlier Wednesday, official data showed that Swiss consumer price inflation rose less-than-expected in October.

In addition, the greenback was down against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.26% to hit 1.0024, AUD/USD surging 0.78% to hit 1.0141 and NZD/USD jumping 1.91% to hit 0.7946.

Earlier Wednesday, official data showed that the unemployment rate in New Zealand fell more-than-expected in the third-quarter, as the number of employed people rose by 1.0%.

Elsewhere, separate reports showed that Australian retail sales fell unexpectedly in September while the country’s trade balance contracted more-than-expected in September.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.73% to hit a 1-year low.

Earlier Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits rose last week to a seasonally adjusted 457K, after falling to a revised 437K in the preceding week. Analysts had expected initial jobless claims to remain unchanged last week.

The downbeat data came on the heels of the Federal Reserve announcement late Wednesday that it would buy USD 600 billion of U.S. government bonds over the next eight months in an effort to kick-start a "disappointingly slow" economic recovery.

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