Investing.com - The U.S. dollar dropped against its major counterparts Friday, after the Federal Reserve vowed to keep rates low until late 2014 and strong economic data fuelling risk embrace.
During late session U.S. trade, the dollar slipped lower against the euro, with EUR/USD gaining 0.23% to hit 1.3139.
Earlier, the U.S. dollar fell to a five week high low after Fed Chief Ben Bernanke stated yesterday, “We are prepared to provide further monetary accommodation if employment is not making sufficient progress toward our assessment of its maximum level, or if inflation shows signs of moving further below its mandate consistent rate. Bond buying is an option that’s certainly on the table.”
In addition to the Fed’s vow to keep interest rates low until at least late 2014.
Alan Ruskin of Deutsche Bank explained to Bloomberg, “The Fed’s statement reinforced trends that were equity bullish and the risk on trade. The extent of the rally will ultimately be defined by European events, rather than the U.S.”
The single currency added to its five day rally when Italy auctioned 182 day bills at a yield of 1.969%, lower than the 3.251% at a similar sale on December 28.
In Greek news, European Union Monetary Commissioner, Olli Rehn hinted that Greece is close to a deal with its creditors at the World Economic Forum in Davos.
He stated, “The next three days will be very crucial. An agreement may come, if not today, then over the weekend,” further fuelling the euro’s advance.
Dovish statements from the Federal Reserve’s earlier two day meeting weighed on the greenback.
Lee Hardman of Bank of Tokyo – Mitsubishi told Bloomberg,“The more dovish Fed statement has served to reinforce the downward trend in the dollar.”
The greenback traded lower against the pound, with GBP/USD advancing 0.02% to hit 1.5691.
Earlier in the U.K. data showed that retail sales volume dropped to the lowest level since March 2009, with retailers expecting additional weakness in February.
Elsewhere, the greenback was lower against the yen and the Swiss franc with USD/JPY falling 0.80% to 76.83 and USD/CHF falling 0.15% to hit 0.9191.
Earlier in the week, Japan posted its first trade deficit in 31 years for 2011, however the Bank of Japan stated that exports are likely to increase as worldwide recovery takes hold.
The New Zealand dollar added to its six week gain as Reserve Bank Governor, Alan Bollard stated the economy can weather a global slowdown.
In addition, New Zealand exports exceeded imports by NZ$338 million, analysts projected a NZ$50 million shortfall.
The greenback was lower against its Canadian, Australian and New Zealand counterparts with USD/CAD falling 0.04% to hit 1.012, AUD/USD climbing 0.08% to hit 1.0641 and NZD/USD adding 0.27% to 0.8238.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.19% to hit 79.34.
During late session U.S. trade, the dollar slipped lower against the euro, with EUR/USD gaining 0.23% to hit 1.3139.
Earlier, the U.S. dollar fell to a five week high low after Fed Chief Ben Bernanke stated yesterday, “We are prepared to provide further monetary accommodation if employment is not making sufficient progress toward our assessment of its maximum level, or if inflation shows signs of moving further below its mandate consistent rate. Bond buying is an option that’s certainly on the table.”
In addition to the Fed’s vow to keep interest rates low until at least late 2014.
Alan Ruskin of Deutsche Bank explained to Bloomberg, “The Fed’s statement reinforced trends that were equity bullish and the risk on trade. The extent of the rally will ultimately be defined by European events, rather than the U.S.”
The single currency added to its five day rally when Italy auctioned 182 day bills at a yield of 1.969%, lower than the 3.251% at a similar sale on December 28.
In Greek news, European Union Monetary Commissioner, Olli Rehn hinted that Greece is close to a deal with its creditors at the World Economic Forum in Davos.
He stated, “The next three days will be very crucial. An agreement may come, if not today, then over the weekend,” further fuelling the euro’s advance.
Dovish statements from the Federal Reserve’s earlier two day meeting weighed on the greenback.
Lee Hardman of Bank of Tokyo – Mitsubishi told Bloomberg,“The more dovish Fed statement has served to reinforce the downward trend in the dollar.”
The greenback traded lower against the pound, with GBP/USD advancing 0.02% to hit 1.5691.
Earlier in the U.K. data showed that retail sales volume dropped to the lowest level since March 2009, with retailers expecting additional weakness in February.
Elsewhere, the greenback was lower against the yen and the Swiss franc with USD/JPY falling 0.80% to 76.83 and USD/CHF falling 0.15% to hit 0.9191.
Earlier in the week, Japan posted its first trade deficit in 31 years for 2011, however the Bank of Japan stated that exports are likely to increase as worldwide recovery takes hold.
The New Zealand dollar added to its six week gain as Reserve Bank Governor, Alan Bollard stated the economy can weather a global slowdown.
In addition, New Zealand exports exceeded imports by NZ$338 million, analysts projected a NZ$50 million shortfall.
The greenback was lower against its Canadian, Australian and New Zealand counterparts with USD/CAD falling 0.04% to hit 1.012, AUD/USD climbing 0.08% to hit 1.0641 and NZD/USD adding 0.27% to 0.8238.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.19% to hit 79.34.