By Nick Godt
The dollar fell against the Japanese yen while rising against
the euro Thursday, with foreign-exchange traders playing off the
European Central Bank's decision to leave interest rates unchanged
and the Bank of England's move to boost its quantitative-easing
program.
With stocks on Wall Street rallying amid upbeat U.S. economic
data, pressure to sell the dollar remained in place. On Wednesday,
the Federal Reserve maintained its pledge to keep interest rates
low for the foreseeable future.
"Ahead of the G20 meeting, policy officials appear to be going
out of their way to reassure markets that stimulus packages will
remain in place until a sustainable recovery has been assured,"
said BNP Paribas in a note. Finance ministers and central bankers
of the Group of 20 nations are scheduled to meet Friday and
Saturday in St. Andrews, Scotland.
The dollar's drop against the yen picked up a little steam after
the U.S. government said claims for unemployment benefits fell in
the latest week, while productivity in the leading global economy
rose more than expected in the third quarter.
The dollar bought 90.73 yen, up 0.3% on the day.
Meanwhile, the British pound first gained some ground before
trading little changed against the dollar, after the Bank of
England's decision to expand its quantitative-easing program by 25
billion pounds.
Some in the market had expected a bigger expansion of the
program that buys up gilts and other assets. Interest rates in the
U.K. were kept at a record low of 0.5%.
The pound (CUR_GBPUSD) rose 0.1% to stand at $1.6581.
Also Thursday, the European Central Bank kept its benchmark
rates unchanged at 1%, as had been widely expected it would.
Speaking at a news conference after the decision, ECB president
Jean-Claude Trichet said that risks to the outlook are "broadly"
balanced and that he believes inflation expectations are firmly
anchored.
The euro gained a bit of ground against the dollar, rising to
$1.4874 after having been in negative territory earlier in the
European trading session.
On Wednesday, the dollar lost some ground against major
counterparts after the Fed left rates unchanged near zero and
affirmed its commitment to exceptionally low rates as the U.S.
economy seeks to stage a recovery.
In other dollar-related news, Deutsche Bank AG said the
PowerShares DB US Dollar Index Bullish Fund (UUP) had run out of
new shares and wouldn't be able to issue any more until its gets
clearance from the Securities and Exchange Commission.
Several commodities ETFs suspended issuing new shares, amid
regulatory examinations into their role in driving up commodity
prices.