The dollar fell to an eight-month low against a basket of 10 major currencies on bets disruption from the U.S. debt-ceiling debate will damp growth and prompt the Federal Reserve to postpone tapering its stimulus program.
The greenback lost the most in a month versus the euro as Fed Bank of Dallas President Richard Fisher said fiscal discord has undermined the case for slowing the central bank’s bond purchases, which tend to debase the dollar. A 16-day government shutdown ended after Congress approved a deal yesterday extending funding and debt-limit deadlines into next year. The pound climbed after U.K. retail sales rose more than forecast.
“Tapering is looking less and less likely,” Richard Franulovich, the chief currency strategist for the northern hemisphere at Westpac Banking Corp. (WBC) in New York, said in a phone interview. “In the next few months, there’s a window of opportunity for currencies and risk assets to rally across the board against the dollar.”