The U.S. Dollar Index slipped to a 4-week trough during the Monday trading session in Asia on speculation that the current ultra loose monetary policy of the U.S. Federal Reserve Bank is likely to endure given that the new front runner to replace Ben Bernanke is the dovish Janet Yellen. Lawrence Summers, the lead candidate from the hawk’s camp and thought by many the likely choice to succeed Bernanke, withdrew his name from contention for the position. One currency strategist in New Zealand said that investors’ perception was that Summers would have reined in the accommodative policy far quicker than Yellen might.
As reported at 10:15 a.m. (JST) in Tokyo, the U.S. Dollar Index had traded at a session low of 81.06, a loss of 0.532%; the Index is used by investors to measure the Dollar’s strength against its major peers. The EUR/USD pair traded at a 2-week peak of $1.3383 before edging back to $1.3366 while the USD/JPY pair struck a 2-week trough of 98.45 Yen. The greenback also fell against commodity-linked currencies, with the AUD/USD pair edging up to $0.9370 and the NZD/USD moving higher to $0.8234.
Investors Eye Upcoming Fed Meeting
Market players will be anxious to get a read from the Fed’s 2-day policy meeting which will be held on the 17th and 18th but expectations are that any pull backs on the Fed’s asset purchase program will be at the barest minimum of about $10 billion a month.