U.S. Dollar Weakens as Fed Signals Taper Delay

The dollar was set for a weekly drop versus its 16 major counterparts as Federal Reserve officials signal a delay in stimulus reduction before reports next week that may show U.S. home sales and confidence declined.

The Bloomberg U.S. Dollar Index remained weaker following its lowest close in eight months, after a deal by Congress to extend funding and debt-limit deadlines into next year reopened the government and buoyed higher-yielding assets. Australia’s currency trimmed a weekly advance as technical indicators signaling it has risen too rapidly offset the impact of faster growth in China, the nation’s biggest trading partner.

“The debt ceiling issue has been pushed out to February, so the very earliest you’d be looking at Fed tapering is March, though it could be even later than that,” said Besa Deda, the chief economist at St. George Bank Ltd. in Sydney. “There’s been a recovery in risk appetite and that’s seen flows into riskier assets and away from the U.S. dollar.”

Bloomberg

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