The dollar traded near a two-month low against the euro on speculation the Federal Reserve will reduce the target interest rate for overnight lending to a record low today.
The greenback was also near the weakest level in 13 years against the yen as the Fed may also provide details on whether it will buy government debt to push down Treasury yields and stimulate lending. The British pound traded near a record low against the euro and fell versus the dollar before a government report that may show U.K. inflation slowed for a second month, giving the Bank of England more scope to lower borrowing costs.
“Selling the dollar is the most likely scenario,” said Osao Iizuka, head of foreign-exchange trading at Sumitomo Trust & Banking Co. in Tokyo. “Whatever the Fed comes up with, it’s not likely to spark a sudden turnaround in the U.S. economy. It’s difficult to expect a recovery in the dollar.”
The dollar fell to $1.3737 per euro, the weakest level since Oct. 14, before trading at $1.3704 at 7:15 a.m. in London from $1.3688 late yesterday in New York. The dollar was at 90.25 yen from 90.65 yen. It dropped to 88.53 yen on Dec. 12, the lowest level since August 1995. The euro was at 123.66 yen from 124.09 yen. The dollar may decline to $1.3750 today, Iizuka said.
Futures on the Chicago Board of Trade showed a 68 percent chance the Fed will trim its 1 percent target rate for overnight lending between banks today to an all-time low of 0.25 percent, compared with zero odds a month ago. The U.S. central bank has limited room to lower interest rates and may use less conventional policies, such as buying Treasuries, Chairman Ben S. Bernanke said on Dec. 1.
From Bloomberg News.
The greenback was also near the weakest level in 13 years against the yen as the Fed may also provide details on whether it will buy government debt to push down Treasury yields and stimulate lending. The British pound traded near a record low against the euro and fell versus the dollar before a government report that may show U.K. inflation slowed for a second month, giving the Bank of England more scope to lower borrowing costs.
“Selling the dollar is the most likely scenario,” said Osao Iizuka, head of foreign-exchange trading at Sumitomo Trust & Banking Co. in Tokyo. “Whatever the Fed comes up with, it’s not likely to spark a sudden turnaround in the U.S. economy. It’s difficult to expect a recovery in the dollar.”
The dollar fell to $1.3737 per euro, the weakest level since Oct. 14, before trading at $1.3704 at 7:15 a.m. in London from $1.3688 late yesterday in New York. The dollar was at 90.25 yen from 90.65 yen. It dropped to 88.53 yen on Dec. 12, the lowest level since August 1995. The euro was at 123.66 yen from 124.09 yen. The dollar may decline to $1.3750 today, Iizuka said.
Futures on the Chicago Board of Trade showed a 68 percent chance the Fed will trim its 1 percent target rate for overnight lending between banks today to an all-time low of 0.25 percent, compared with zero odds a month ago. The U.S. central bank has limited room to lower interest rates and may use less conventional policies, such as buying Treasuries, Chairman Ben S. Bernanke said on Dec. 1.
From Bloomberg News.