Thursday, 21 Oct 2010

Forex: Geithner Comments Tug at Currency Markets

The dollar trimmed gains against the euro today as traders digested comments made by US Treasury Secretary Timothy Geithner that US data may not have warranted the brief jump in the USD made earlier in the day.

The greenback approached a 15-year low against the yen in early European trading, while the euro neared the day's high. The US currency remains on the back foot on speculation that the Federal Reserve may implement more quantitative easing next month, which would be negative for the dollar.

Geithner was quoted as saying that major currencies were roughly in alignment and that he would use a weekend meeting of G20 finance ministers to advance efforts to rebalance the world economy and move toward norms on currency policy. Investors initially took that as a cue to buy the dollar, but analysts argued Geithner's comments did not mark a significant change in US forex policy, adding that this explained the pullback in the US currency's gains.