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U.S. Dollar Drops after Lawrence Summers Withdraws

The dollar dropped to its lowest in more than two weeks versus the euro after Former Treasury Secretary Lawrence Summers withdrew his name from consideration to be chairman of the Federal Reserve.

The greenback weakened versus all of its Group of 10 currency peers after President Barack Obama said in a statement he accepted the withdrawal. Obama had mentioned Summers and Fed Vice Chairman Janet Yellen as potential candidates to lead the central bank after Ben S. Bernanke’s term as chairman expires Jan. 31, with policy makers preparing to reduce bond purchases, known as quantitative easing. The yen slid against the growth-sensitive currencies of Australia and New Zealand as the U.S. builds support for a plan to eliminate Syrian chemical weapons.

“News that Summers had withdrawn from consideration for the Fed post has surprised the market as he had been widely tipped to take over from Bernanke,” said Imre Speizer, a market strategist at Westpac Banking Corp. (WBC) in Auckland. “Given that he was also perceived to be less QE-friendly than Yellen, the other main contender, the U.S. dollar has fallen.”

Bloomberg [1]

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