USD Falls As Fed Mixed Messages Confuse Market

The dollar fell versus higher-yielding currencies as traders speculated on the Federal Reserve’s pace for interest-rate increases amid slowing global growth.

The dollars of Australia and New Zealand gained against the greenback after Dallas Fed President Richard Fisher said he continued to be “hawkish” on rates but wanted “to be sensible about this.” U.S. stock futures fell, a signal they may extend the longest skid in three years. The ruble dropped after Moody’s Investors Service cut Russia’s credit rating. Sweden’s krona slid.

“You’re getting into this point where accounts and market environments are getting confused by conflicting statements,” Richard Cochinos, head of Americas Group of 10 currency strategy at Citigroup Inc. in New York, said by phone. “The desire to lighten a position is stronger than the desire to add to risk.”

The Bloomberg Dollar Spot Index, which measures the currency against a basket of 10 major counterparts, fell 0.1 percent to 1,063.04 at 9:23 a.m. New York time. It reached 1,080.05 on Oct. 3, the highest level since June 2010.

The dollar was little changed at $1.2761 per euro after dropping 1 percent last week, the most since the five days through April 11. The yen traded at 136.33 per euro. Japan’s currency was little changed at 106.84 per dollar, after sliding 0.9 percent during the previous two days.

The Aussie added 0.4 percent to 87.76 U.S. cents and New Zealand’s kiwi rose 0.4 percent to 79.50 U.S. cents.

Standard & Poor’s 500 Index futures expiring in December fell 0.3 percent after the gauge posted four weeks of declines. A month-long rout of European stocks continued.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza