Dollar falls vs most majors; euro off 5-week highs

By Gertrude Chavez-Dreyfuss and Wanfeng Zhou

NEW YORK (BestGrowthStock) – The dollar fell against higher-yielding currencies such as the Australian dollar on Wednesday as the Federal Reserve’s commitment to low interest rates prompted investors to seek higher returns elsewhere.

The euro slipped after touching a five-week high against the greenback earlier. Analysts said sentiment on the single currency remained negative despite European Union members’ pronouncements of support for debt-strapped Greece.

“If you look at the broader picture, we’re seeing most major currencies — sterling, Australian and New Zealand dollars — rallying against the U.S. dollar,” said John McCarthy, director of FX trading at ING Capital Markets in New York. “Clearly, risk appetite is up.”

The Fed on Tuesday kept its pledge to keep interest rates low for an “extended period.” The Bank of Japan eased monetary policy on Wednesday by doubling the funds available to banks for three-month loans at the policy rate.

In late trading, the ICE Futures’ dollar index (Read more about the global trade. ) (.DXY: ), which tracks the performance of the greenback versus a basket of six major currencies, fell 0.1 percent to 79.710, after slipping to a six-week low of 79.507.

The euro fell (Read more about the trembling euro. ) 0.2 percent to $1.3738 after hitting a five-week high of $1.3817, according to Reuters data.

“The euro is not following the rally in risky assets. It did touch above $1.38, but that’s it. That tells me that the market still wants to sell the euro and if we fall below $1.37 again, you’ll see selling in the euro gain momentum,” ING’s McCarthy said.

The European Union’s executive reassured Greece on Wednesday that the bloc was ready to help Athens overcome its financial problems but provided no details of how this would be achieved.

The euro also fell near a 17-month low against the Swiss franc at 1.4477, according to Reuters data, as investors took out option barriers at 1.4500.

The dollar was little changed at 90.24 yen.

The BoJ’s decision to increase the funds available to banks was widely flagged. However, it left the duration of fixed-rate loans unchanged at three months and two of its seven board members dissented.

BoJ Governor Masaaki Shirakawa said the liquidity operation was not aimed at affecting exchange rates. Some in the market speculate Japanese authorities want to stem yen strength.

Sterling was one of the day’s biggest movers, rising after the number of Britons claiming unemployment benefits in February fell.

Sterling jumped to $1.5382, its strongest against the dollar in nearly three weeks, and was last at $1.5325, up 0.5 percent.

Minutes from the Bank of England’s policy meeting earlier this month showed board members voted unanimously not to extend quantitative easing, which also boosted the pound.

Higher oil prices help lift commodity-linked currencies. Against the Canadian dollar, the U.S. unit fell as low as C$1.0071, its weakest since July 2008, and last traded at C$1.0101, down 0.3 percent.

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(Editing by Kenneth Barry)

Dollar falls vs most majors; euro off 5-week highs