The dollar fell against its higher- yielding peers after the Federal Reserve said it will buy an additional $600 billion of Treasuries to boost the U.S. economy. The euro jumped to a nine-month high against the dollar amid speculation the European Central Bank, which kept its benchmark interest rate unchanged, will continue withdrawing stimulus measures. The pound rose as the Bank of England refrained from adding to its asset purchases. The Dollar Index slumped to its weakest level since December as stocks advanced. “There’s risk-on mentality prevailing that’s helping the riskier currencies at the expense of the dollar,” said Jeremy Stretch, executive director of foreign-exchange strategy in London at Canadian Imperial Bank of Commerce. The dollar weakened 0.8 percent to $1.4252 per euro at 1:17 p.m. in London, from $1.4139 in New York yesterday. It earlier depreciated to $1.4266, the weakest since Jan. 20. Against the yen, the dollar depreciated 0.4 percent to 80.76. The greenback was 2.1 percent weaker at 79.66 cents per New Zealand dollar and depreciated 1.3 percent to 6.4966 Swedish krona. The yen fell 0.4 percent to 115.13 against the euro. IntercontinentalExchange Inc.’s Dollar Index, which tracks the currency against those of six major U.S. trading partners including the euro, dropped for a third day, losing 1 percent to 75.730, after touching 75.698. The Stoxx Europe 600 Index jumped 1.5 percent after sliding 0.4 percent yesterday. U.S. stock-index futures also climbed. ‘Disappointingly Slow’ The Federal Open Market Committee said in its statement yesterday that it was compelled to act because “progress” toward the objectives of full employment and stable prices “has been disappointingly slow.” The Fed has kept U.S. interest rates near zero since December 2008 to try to stimulate growth following the worst recession since the Depression. The Fed is “ultra dovish and have left the door open to more,” said Kathleen Brooks, research director in London at Forex.com, part of online currency trading firm Gain Capital. “That’s not an environment where the dollar can rally.” Benchmark interest rates are 4.75 percent in Australia and 3 percent in New Zealand, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. The British pound jumped 1.1 percent to $1.6257, its strongest level since January. The Bank of England kept its main interest rate at a record low of 0.5 percent and maintained the size of its bond stimulus plan at 200 billion pounds, as forecast by economists in Bloomberg News surveys. ECB Hold-Off Sterling was also supported as a report showed house prices erased almost half of the record drop posted the previous month. The average cost of a home increased 1.8 percent from September, when it declined 3.7 percent, mortgage-lender Halifax said in an e-mailed statement today. Property values were unchanged from the same month a year earlier. The ECB left its refinancing rate at 1 percent today, as predicted by all 55 economists in a Bloomberg News survey. The central bank has said it intends to continue withdrawing its emergency measures. The euro’s gains are likely to stall as investors focus on the region’s sovereign-debt crisis, BNP Paribas SA said. Ireland is preparing next year’s budget and will announce plans for 2011 budget cuts and tax-raising measures by tomorrow. The country last month said it needs 15 billion euros of savings over the next four years. There are “specific issues, which are likely to weigh on the euro, including the outline of the Irish budget,” BNP analysts led by Hans-Guenter Redeker, global head of currency strategy in London, wrote in a client note today. “While euro- dollar is still likely to push higher in the next few days we would suggest that upside potential is now becoming more limited and we would recommend caution.” To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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