The dollar and the yen fell as a wave of global interest-rate cuts sparked a rally in Asian stocks, bolstering demand for higher-yielding assets.
The
greenback slid for a third day against the euro after the Federal
Reserve reduced its target lending rate to the lowest in half a
century. The yen dropped to a one-week low versus the European currency
on speculation the Bank of Japan will lower borrowing costs when it
meets tomorrow. South Korea's won jumped the most in a decade after the
Fed provided funds to alleviate a shortage of dollars in the nation.
The ICE's Dollar Index,
which tracks the greenback against the euro, the yen, the pound, the
Canadian dollar, the Swiss franc and the Swedish krona, fell 2 percent,
extending the biggest decline since October 1998. It touched the
highest level since April 2006 on Oct. 28.
U.S. policy makers
reduced the fed funds target by a half- percentage point to 1 percent
yesterday, matching a level reached in June 2003 and before that during
the Dwight Eisenhower administration in the late 1950s.
Gross
domestic product shrank by 0.5 percent in the third quarter for its
biggest decline since the 2001 recession, data due at 8:30 a.m. today
in Washington will show, according to a Bloomberg News survey of
economists.
The U.S. central bank has cut its benchmark rate from
5.25 percent in the past 13 months and created six lending programs
channeling more than $1 trillion into the financial system to limit the
severity of a looming recession.
The Australian dollar rose
to 68.63 U.S. cents from 66.81 cents late yesterday in New York on
speculation a rate cut in China, the world's largest consumer of
industrial metals, will boost demand for Australia's exports.
The yen fell against higher-yielding currencies as Asian stocks gained on speculation monetary officials across the globe can thaw a seizure in credit markets.
The yen also declined
as investors speculated that the Bank of Japan will cut borrowing costs
tomorrow. The currency slumped the most since 1974 and stocks rallied
after the Nikkei newspaper said Oct. 28 that policy makers are leaning
toward lowering rates.
EUR/USD the pair is consolidated in the field of a session high $1,3130-$ 1,3290.