Dollar weighed down by dovish Fed member comments

September 24, 2013

The US dollar was unable so far to gain ground after its decline on Friday, especially against the Japanese yen. The US currency depreciated against most major G10 currencies on Monday but has mostly been directionless in the past two sessions.  

Lack of key data releases in the Asian session and lack of a catalyst has kept the currency subdued.

Central banker comments on Monday from key Fed policy makers on their dovish outlook for the US economy did not help matters. Bothe Atlanta Fed President and New York Fed President back the Fed’s decision last week to maintain stimulus and not taper.

Adding to the dollar woes is a looming debt ceiling, meaning that the US government could shutdown in less than two weeks unless Congress reaches an agreement to raise the ceiling.

The main “risk off” theme prevailing in the markets has benefitted the safe haven Japanese yen.

USDJPY decline sharply on Monday to a low of 98.65 where it consolidated throughout the Asian session today. 

Comments from ECB President Mario Draghi on Monday weighed on euro as he signalled that low interest rates will be maintained and he is willing to launch another LTRO program if necessary. (long term refinancing for banks)

EURUSD traded sideways in a very tight range just below the key psychological level of $1.3500. Focus will be on German Ifo business sentiment data later today.

GBPUSD retraced its small advance from yesterday, inching down to $1.6021.

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