Forex Top Story
11/4/2009 2:57 PM ET
(RTTNews) -
The dollar hit the skids on Wednesday, before and after the Federal Reserve announced they intend to keep US interest rates at extraordinarily low levels for a long time despite mounting evidence the economy is on the mend.
Since December, the US central bank has kept overnight rates close to zero percent and reaffirmed Wednesday it will maintain them there for an "extended period."
Increased risk appetite was hurting the dollar versus higher-yielders prior to Fed's statement on the outlook for rates.
The buck plunged to 1.4900 versus the euro, moving within two cents of a 14-year low hit eight days ago. The buck had been stabilizing against the euro for the last week, but with the interest rate gap between the US and other nations likely to rise, the dollar carry trade will likely ramp up again.
Against the sterling, the dollar slid to 1.6595, extending its losses from the previous session. The pair has been stuck between 1.5700 and 1.6700 for the past two months.
The dollar also went back on the defensive versus the loonie, slipping below $1.0600 before finding its footing. Against the yen, the dollar held its ground, staying above the 90 mark in choppy trading.
Private sector employment continued to decrease in the month of October, according to a report released by Automatic Data Processing, Inc. (ADP) on Wednesday, although the pace of job losses slowed for the seventh consecutive month.
The prelude to Friday's all-important jobs report showed that non-farm private employment fell by 203,000 jobs in October following a revised decrease of 227,000 jobs in September.
Without a stable jobs situation, spending by US consumers, once the engine of the global economy, is unlikely to return to pre-recession levels.
Meanwhile, the Institute for Supply Management released a report on Wednesday showing that activity in the service sector grew for the second consecutive month in October, but the pace of growth unexpectedly slowed compared to the previous month.
by RTT Staff Writer
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