Bloomberg: Dollar Drops; Federal Reserve May Say Rates No Longer Stimulating Economy

Dec. 12 (Bloomberg) — The dollar fell against the euro and
erased a gain versus the yen on speculation the Federal Reserve
may say tomorrow that interest rates are no longer stimulating
the U.S. economy.

The Fed will stop saying rates provide “accommodation,”
according to 12 of the 22

primary dealers in U.S. government
securities surveyed by Bloomberg. Seven consecutive increases in
the Fed’s target rate since January pushed the dollar toward its
first annual gain against the euro and yen in four years.

“There are expectations the Fed’s language will change,”
said Daragh Maher, a currency strategist in London at Calyon, the
securities unit of Credit Agricole SA. “The euro’s being driven
by the idea that rates are close to peaking in the U.S., whereas
there’s still the possibility of future hikes in Europe.”

The dollar fell to $1.1871 versus the euro at 8:41 a.m. in
London from $1.1811 at 5 p.m. in New York on Dec. 9, according to
electronic currency trading system EBS. The dollar was at 120.55
yen from 120.66, erasing a gain from earlier today. The euro
reached a record 143.15 yen earlier today.

– Editor: Moss

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