Greenback continues to languish

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Greenback continues to languish

The dollar remained lower against most of its major peers as traders speculated whether the U.S. economy is strong enough for the Federal Reserve to decide as early as next week to start reducing its bond-buying stimulus.

The greenback traded near its lowest this month against the euro before a report forecast to show U.S. jobless claims rose.

Demand for the dollar as a haven receded as the U.S. delayed a congressional vote on military action in Syria. The yen gained after Japan’s machinery orders stagnated.

Australia’s dollar dropped as employers unexpectedly cut payrolls. The New Zealand dollar climbed as the Reserve Bank signaled it may raise interest rates earlier than previously expected.

“The Fed will start tapering next week, but I think they might also be a bit dovish, and that might see the U.S. dollar weaken again in a knee-jerk reaction,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia, the nation’s biggest lender. “The Syria issue had supported the U.S. dollar, but it seems to have eased off a bit.”

The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, was little changed at 1,023.79, set for the lowest close since Aug. 20.

U.S. jobless claims probably rose to 330,000 in the week ended Sept. 7, from 323,000 in the previous seven-day period, according to the median estimate of economists surveyed.

The Federal Open Market Committee will meet to decide policy Tuesday and Wednesday.

The central bank is forecast to slow its monthly bond buying to $75 billion from the current $85 billion, according to the median estimate in a poll of economists on Sept. 6.

Fed Bank of New York President William C. Dudley said in July that economic growth will probably quicken next year, possibly warranting a reduction in stimulus.

“I expect the Fed to alter its forward guidance to keep bond yields anchored while starting to taper monetary easing,” said Noriaki Murao, the New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ. “There are few reasons for the dollar to rise as long as U.S. yields are capped.”

The benchmark Treasury 10-year note yielded 2.88 percent yesterday, having dropped from 3.005 percent on Sept. 6, the highest since July 2011.

A Russian initiative to avert U.S. military strikes on Syria through a plan to eliminate President Bashar al-Assad regime’s chemical weapons faces a first test when U.S. Secretary of State John Kerry met in Geneva yesterday with his Russian counterpart, Sergei Lavrov.

“This is a process that will take a certain amount of time, but it needs to be credible, it needs to be verifiable,” White House spokesman Jay Carney said in Wednesday in Washington.

In Japan, machinery orders were unchanged in July from June, when they fell 2.7 percent, the Cabinet Office announced yesterday in Tokyo.

The result underscores limits on corporate investment as Japan’s Prime Minister Shinzo Abe tries to drive an economic revival in the world’s third-largest economy and end 15 years of entrenched deflation.

Bloomberg

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