U.S. Dollar Briefly Falls Below Parity with Aussie

By: Barbara Zigah

In London trading, the weakened U.S. Dollar slipped to a 1-month low against the Australian Dollar which achieved parity as commodity prices, especially gold, continue to rise. As reported at 9:38 a.m. (EST) in New York, the U.S. Dollar was trading against the Aussie at $0.9973; in London earlier, it was trading above parity at $1.0002.

Investors say they are positioning themselves by trimming some positions ahead of the Federal Open Market Committee meeting to be held today in Washington. The softness in the greenback is coinciding with a retreat in yields on U.S. Treasury instruments, likely fallout from the Moody’s warning that was issued to the U.S. government that the Aaa credit rating is in danger of being lowered.

One currency analyst noted that the hint of a possible extension of the Fed’s $600 billion stimulus package is having a detrimental effect on the greenback over the near term. The FOMC will be meeting later today to discuss any possible modifications to the QE stimulus. Even in light of the Moody’s warning, the FOMC is not likely to alter the current plans.