Dollar bulls see chance to buy amid weakness after Fed decision

by **Cals** Mon 21 Sep 2015, 04:54

Dollar bulls see chance to buy amid weakness after Fed decision

Saturday, 19 September 2015

THE US dollar weakened after the Federal Reserve refrained from raising interest rates, with some investors seeing the drop as a chance to buy.
A gauge of the US currency against major peers fell to a three-week low as stubbornly low inflation, an uncertain outlook for global growth and recent financial-market turmoil prompted US policymakers to keep rates at a record low, undermining the dollar. It slid most against the currencies of commodity-producing nations such as New Zealand and Australia.
“While the dollar may be heading lower now, the market is only going to turn its attention to December for the next hike,” said Jane Foley, a senior currency strategist at Rabobank International in London. “There might be a little bit of position adjustment now but the market is going to start looking ahead. The dollar weakness has only got so far to run.”
The dollar fell 0.7% to 119.20 yen as of 7:05am New York time yesterday, extending its weekly drop to 1.2%. The greenback was little changed at US$1.1425 per euro, after tumbling 1.3% on Thursday. It has declined 0.8% against Europe’s common currency this week. The Bloomberg Dollar Spot Index slid 0.4% to 1,189.51, headed for its lowest close since Aug 24. The US currency dropped 1.3% against the Australian dollar to 72.66 US cents. It slumped 1.3% to 64.37 US cents per New Zealand dollar and tumbled 0.9% to 13.2277 South African rand, having touched 14.0682 on Aug 24, the strongest level on record.
The greenback is poised to strengthen to parity with the euro and rise to 125 yen in the next 12 months, according to Principal Global Investors. The Fed will probably boost rates in December, although it may delay lift-off until the first quarter if it remains concerned a strengthening dollar will hurt exports, said Jim McCaughan, chief executive officer of Principal, which manages about US$350bil.
“It would require a much greater shock than I see to the world or US economy to see rates not go up,” McCaughan, who is based in New York, said in Singapore. “The dollar will not be held back by the dovish monetary policy for an awful lot longer.” — Bloomberg