Euro holds steady as German cabinet backs EFSF changes
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar was little changed versus major rivals Wednesday, with overall activity subdued as investors awaited August employment data and continued to assess prospects for further monetary stimulus by the Federal Reserve.
The dollar index DXY -0.08% , which tracks the U.S. currency against six major rivals, traded at 73.974, up from 73.968 in late North American trading on Tuesday.
The minutes from the Federal Reserve’s latest policy meeting released Tuesday showed some dissent on whether to take more action to help the U.S. economy.
“The main new piece of information in the minutes of the August FOMC meeting was that a few members stood ready to do more,” said strategists at Barclays Capital.
Strategists said the minutes show the bar for further action by the Fed continues to decline, to the potential detriment of the dollar.
It also helped boost equities and other “risky” assets, although risk-related correlations may be deteriorating, analysts said.
The message from the minutes was that “mad money is here to stay whether one or two FOMC members dissent or not,” said Kit Juckes, head of foreign exchange at Societe Generale. “This helped ‘risk’ rebound, though it should be said that if the dollar benefits less and less from safe-haven status, risky assets are getting less and less of a lift from the panacea of cheap money in each crisis.”
The result, he said in a note, is “a nervous, slightly directionless market.”
The euro EURUSD +0.09% traded at $1.4440, little changed from $1.4442 in late North American trading on Tuesday. The 17-nation shared currency was buoyed in earlier activity after German Chancellor Angela Merkel’s cabinet approved draft legislation to revamp the euro-zone bailout fund, setting the stage for a crucial parliamentary vote on Sept. 29.
The British pound GBPUSD +0.07% traded at $1.6295, down slightly from $1.6310 in late Tuesday trading.
The dollar USDJPY -0.25% declined against the yen, however. The greenback bought ¥76.57, down from ¥76.67 on Tuesday.
