Forex - Dollar mostly lower on continued Fed easing

Published 12/13/2012, 10:02 PM
Updated 12/13/2012, 10:03 PM
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Investing.com- The U.S. dollar was mixed against its major rivals during Friday’s Asian session as investors continued to weigh the Federal Reserve’s recent policy decision and U.S. lawmakers failed to reach a compromise on the fiscal cliff.

In Asian trading, the EUR/USD rallied 0.12% to 1.3093. The pair is trading near the recent high of 1.3096 reached on Thursday. The euro has been moving steadily higher against the dollar throughout the week, but support may be found at Wednesday’s intraday inflection point at 1.3037.

The Federal Reserve said it would keep interest rates near zero in the U.S. until the unemployment rate drops below 6.5%, and likely at least until 2015. With continued easing, the dollar has weakened against most other major currencies.

The dollar also dropped against the pound, with the GBP/USD rallying 0.05% to 1.6121. Like the euro, the pound has seen consistent strength against the dollar for most of the week, but moved off its recent high of 1.6166 hit on Wednesday.

One currency the dollar did not gain against was the yen, with the USD/JPY trading up 0.08% at 83.72. Negative economic data released early Friday in Japan supports the notion that Japan’s Liberal Democratic Candidate Shinzo Abe will win Sunday’s election. Abe has called for unlimited quantitative easing from the Bank of Japan, which would weaken the Japanese yen against other currencies.

The Canadian dollar gained against the greenback in Friday’s Asian session, as the USD/CAD dropped 0.09% to 0.9841. The pair is far off its Monday high of 0.9884. It is likely to find resistance at Thursday’s recent low of 0.9827.

The Australian dollar and New Zealand dollar also gained against their U.S. counterpart. The AUD/USD rose 0.09% to 1.0537, while the NZD/USD rose 0.06% to 0.8437.

Overall, the U.S. dollar continued its recent dive in Friday’s Asian session, although its drop appeared to moderate from recent days. The U.S. dollar index fell 0.07% to 79.94.

With the Federal Reserve bolstering its bond purchase program and promising to keep rates near 0% for an extended period of time, the dollar may remain weak in future sessions.

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