Forexpros - The U.S. dollar was trading close to multi-month lows against the euro and the other major currencies on Wednesday, after Germany’s constitutional court approved the ratification of the euro zone’s new bailout fund, while prospects for further stimulus by the Federal Reserve continued to weigh on the dollar. During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.35% to 1.2899. The ruling by Germany’s constitutional court will allow the country’s president to ratify the European Stability Mechanism under certain conditions and clear the way for the European Central Bank’s bond purchasing program to proceed. The court said Germany’s liability to the EMS must not exceed EUR190 billion without the approval of the lower house of parliament and said that both houses of parliament must be kept informed about decisions relating to the ESM. Meanwhile, markets continued to eye the outcome of the Federal Reserve’s policy meeting on Thursday, after disappointing U.S. employment data last week fueled fresh expectations for the central bank to add stimulus, sending the greenback broadly lower. Adding to pressure on the U.S. dollar, Moody’s said on Tuesday that it could downgrade the U.S’s triple-A rating if budget negotiations for 2013 do not result in policy measures which will reduce the country’s debt. The greenback was also lower against the pound, with GBP/USD easing up 0.12% to 1.6089. The pound found support after official data showed that the number of people claiming unemployment benefit in the U.K. fell by a seasonally adjusted 15,000 in August, defying expectations for an increase of 500. The unemployment rate ticked up to 8.1%, from 8.0% in July, compared to forecasts for an unchanged reading. Elsewhere, the greenback edged higher against the yen, with USD/JPY rising 0.11% to hit 77.84 but was lower against the Swiss franc, with USD/CHF falling 0.27% to trade at 0.9365. The greenback was lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.07% to 0.9738, AUD/USD climbing 0.34% to 1.0469 and NZD/USD gaining 0.26% to trade at 0.8193. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.20% to 79.84. Also Wednesday, German Chancellor Angela Merkel welcomed the court ruling on the ESM, calling it a good day for Germany and for Europe.

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