Dollar Trades Near 7-Month Low Versus Euro as Fed Avoids Taper

Bloomberg(18/9) -- The dollar traded 0.2 percent from a seven-month low against the euro after the Federal Reserve kept the current pace of asset purchases that tend to debase the currency, defying economists predicting a stimulus reduction. Demand for the greenback waned after policy makers maintained the U.S. central bank’s $85 billion of monthly purchases of government debt and mortgage-backed securities, known as quantitative easing or QE, compared with a forecast by economists surveyed by Bloomberg News for a $5 billion reduction in Treasury purchases. The yen maintained losses versus most of its major counterparts after a government report today showed Japan had a trade deficit for a 14th month. “The Fed statement was noticeably dovish, causing dollar selling,” said Yuki Sakasai, a foreign-exchange strategist in New York at Barclays Plc. “There is expectation that there may more QE.” The dollar was little changed at $1.3526 per euro as of 9:23 a.m. in Tokyo after touching $1.3542 yesterday, the weakest since Feb. 7. It gained 0.1 percent to 98.08 yen after falling as much as 1.4 percent yesterday to 97.76, the lowest since Aug. 29. Japan’s currency slid 0.2 percent to 132.63 per euro. “Conditions in the job market today are still far from what all of us would like to see,” Fed Chairman Ben S. Bernanke said at a press conference yesterday in Washington after a two-day meeting of the Federal Open Market Committee. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.”