BLBG: Dollar May Fall on ‘Dovish’ Fed Policy Makers, BNP Paribas Says
By Lukanyo Mnyanda
Nov. 11 (Bloomberg) -- The dollar may extend its decline after Federal Reserve speakers delivered “dovish” statements yesterday, indicating they are concerned that unemployment will continue rising, according to BNP Paribas SA.
“Any effort to stabilize the dollar in the short term can only come from the Fed via verbal intervention, threatening to hike interest rates early if required,” BNP Paribas analysts led by Hans-Guenter Redeker in London wrote in a research note today. Yesterday’s speeches indicated that “Friday’s release of the weak October labor-market report impacted Fed thinking.”
The dollar fell 0.3 percent to $1.5039 per euro as of 9:37 a.m. in London, pushing its decline this year to 7.1 percent. It has declined versus all of the 16 most actively traded currencies tracked by Bloomberg since Dec. 31.
U.S. economic growth and inflation may persist below ideal levels into 2011, making the central bank’s current interest- rate stance “appropriate,” Federal Reserve Bank of Dallas President Richard Fisher said in a speech yesterday in Austin, Texas. Richmond Fed President Jeffrey Lacker said in an interview with CNBC that U.S. consumer spending should rise at “modest” pace in coming months.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net
