The Dollar fell near an all-time low against the Euro on Thursday as investors debated the size of an expected Federal Reserve interest rate cut next week after soft economic data pointed to sluggish growth. Declining US stocks, used by investors as a barometer of risk aversion, also pushed the Dollar lower versus the Yen.
Forex analysts said the unexpected fall in orders for long-lasting manufactured goods, the latest in a raft of weak economic reports this month, had sealed the case for further monetary easing at the Fed's Oct. 30-31 policy meeting. Such a step, coming after last month's 50bp reduction in the Fed funds rate target to 4.75%, would further diminish the demand of Dollar-denominated assets and undermine the struggling US currency. US interest rate futures fully reflect a 25bp cut in the Fed's benchmark lending rate, while the chances for a 50bp reduction are around 55%.
Yesterday, EurUsd was up 0.43% at 1.4323, edging closer to the record peak of 1.4349 hit on Monday. It climbed as high as 1.4344 in European session, helped by the drop in US durable goods orders. EurJpy went up 0.49% to 163.42 while GbpJpy was up 0.16% to 234.04 after touching 235.14 high. The UsdJpy last traded unchanged at 114.09, off intraday high of 114.57. High-yielding currencies such as the Australian and New Zealand Dollars gained despite lingering risk aversion as investors focused on prospects of higher interest rates to curb inflationary pressures in those two countries. The NzdUsd traded 0.99% higher at 0.7616, while the AudUsd firmed 0.7% to 0.9083. The US Dollar fell 0.33% versus the Canadian Dollar to 0.9663.
Oil price rose to a fresh all-time high above $92 a barrel and Gold hit a fresh 28-year peak of 778.25 an ounce.