Dollar Falls 3rd Day Versus Yen on Fed Stimulus Prospects

The dollar slid for a third day against the yen before U.S. data this week forecast to show manufacturing activity and hiring remained weak, adding to the case for further monetary easing by the Federal Reserve.

The Dollar Index traded near a three-month low after Fed Chairman Ben S. Bernanke said at an annual forum in Jackson Hole, Wyoming that joblessness was a “grave concern” and that further bond purchases under quantitative easing shouldn’t be ruled out. Labor Department data on Sept. 7 may show the U.S. added fewer jobs in August. Australia’s dollar slid while the yen climbed amid signs of slowing growth in China.

“Weak U.S. data will now be seen as raising the chance of QE, which is U.S. dollar negative,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington, referring to asset purchases known as quantitative easing. “Non-farm payrolls is certainly the most important event for this week.”

via Bloomberg

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