Dollar Holds Losses After Fed Flags Inflation Risk, Aussie Falls

The dollar remained lower against its major peers after the Federal Open Market Committee said persistently low inflation could hamper U.S. economic expansion, spurring bets monetary stimulus will be maintained.

The greenback traded near a six-week low versus the euro before a report tomorrow expected to show U.S. hiring slowed in July. Federal Reserve Chairman Ben S. Bernanke said last month a reduction in stimulus would depend on the economy’s performance. The pound traded at the lowest in more than four months against the euro before policy decisions from the Bank of England and the European Central Bank. Australia’s dollar slid to levels not seen since 2010, and New Zealand’s dollar slid.

The dollar was little changed at $1.3300 per euro as of 8:30 a.m. in Tokyo from yesterday, when it touched $1.3345, the weakest since June 19. The U.S. currency lost 0.1 percent to 97.78 yen, after yesterday dropping to 97.59, the lowest since June 27. The yen gained 0.1 percent to 130.05 per euro.

Sterling slipped 0.2 percent to 87.61 pence per euro, after reaching 87.66 yesterday, the least since March 12. The British currency fell 0.2 percent to $1.5178.

The Aussie slumped 0.4 percent to 89.48 U.S. cents and reached as low as 89.27, the weakest since September 2010. New Zealand’s kiwi lost 0.3 percent to 79.60 U.S. cents.

(Source: Bloomberg)