The US dollar slipped against most currencies on Wednesday after Federal Reserve meeting minutes released the previous day reinforced expectations of more monetary easing in the United States. The euro had earlier risen above $1.40 but failed again to hold above that level. Analysts said the risk of a near-term correction in euro/dollar is building, even though investors continue to sell the dollar on any rallies.
Minutes of the Fed's September meeting showed officials thought the struggling US recovery might soon need more help. They discussed ways to provide it, including adopting a price-level target and buying longer-term US government debt. More Fed easing means more cheap dollars in the market and low US rates eroding the return on dollar-denominated assets. "With the FOMC minutes validating the market's expectations for stimulus in November, investors have jumped back into the market to sell dollars," said Kathy Lien, director of currency research at GFT in New York.
In late afternoon trading, the euro rose 0.3 percent to $1.3962, after having earlier hit as high as $1.4002 on electronic trading platform EBS. But the euro failed to hold above $1.40 for the third day in five since hitting an eight-month high of $1.4030 last week. Many analysts note $1.40 as a key resistance level, which draws corporate selling interest as companies repatriate their earnings from Europe.
The euro ran into offers ahead of 1.4000, where option hedging has been reported, strategists at Action Economics wrote to clients. The dollar index, which measures the greenback's performance against a six-currency basket, fell 0.4 percent to 77.072, not far from a nine-month low of 76.906 set last week.
The dollar fell to a record low of 0.9546 Swiss francs, using Reuters data. Its low was 0.9544 on EBS. The Australian dollar climbed to its highest level against the US dollar since it was allowed to float freely in December, 1983. The Aussie dollar climbed as high as US $0.9937, less than 1 cent from parity, before retreating to US $0.9906, up 0.4 percent on the day. The dollar was little changed at 81.74 yen, on caution that Japanese authorities could intervene the closer it gets to its record low of 79.75 yen. The dollar hit a 15-year low of 81.37 yen on EBS on Monday.
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