The dollar fell broadly except the Japanese yen on Wednesday on expectations that the Federal Reserve would hold U.S. interest rates near zero level for some time. The ICE futures U.S. dollar index, which tracks the greenback against a basket of six major currencies, hit a fresh 14-month low of 74.94. Although U.S. shares traded higher for most of the session, DJI nose-dived, down 92.12 points, after Rochdale Research analyst Richard Bove cut his rating on Wells Fargo. In addition, U.S. President Obama said that the government is winding down the major banks' portion of TARP program as they no need new assistance from the government compared to a year ago.
Euro eventually penetrated the 1.5000 level for the first time in 14 months versus the dollar on Wednesday although European officials voiced concern this week over the strength of the euro. The single currency fell sharply to 1.4888 in Asian session on long-liquidation, however, buying interest on dips lifted euro to a fresh 2009 high of 1.5047 in New York afternoon before retreating on profit-taking.
The British pound rallied on Wednesday after hawkish comments from England Governor Mervyn King. King was quoted from a newspapers that U.K. interest rates 'at some point will return to normal levels.' In addition, the Bank of England October policy meeting minutes showed that policymakers voted unanimously this month to leave the size of its asset purchase programme unchanged at 175 billion pounds. The MPC also said recent economic developments had generally been positive and inflation is likely to rise in short-term. Although sterling retreated after the release of weaker-than-expected U.K. CBI manufacturing data (-51 versus the expectation of -45 n previous month's reading of -48.0), euro-led rise lifted cable to as high as 1.6638 against the greenback in New York afternoon.
Earlier in Asian session, New Zealand's central bank chief Alan Bollard said that the strength of the kiwi would not necessarily prevent in increase in interest rates. Nzd/usd rallied to 0.7635 while aud/usd rose to 0.9330 in New York trade.
Data to be released on Thursday include trade balance, all industry activity index in Japan, trade balance in Switzerland, current account in eurozone, retail sales in U.K.; jobless claims, house price index and leading indicator in U.S.; retail sales in Canada.