The Dollar drops against the EURO as FED won't raise rate till mid 2010

The Greenback declined to the weakest level against the euro since before the bankruptcy of Lehman Brothers Holdings Inc. on speculation the Federal Reserve will trail other central banks in increasing borrowing costs. The U.S. currency pared its drop versus the euro and yen after a large order to buy the greenback, traders said. Sterling rose from a six-month low against the euro as Bank of England Deputy Governor Charles Bean said asset purchases may be working to support the economy. The euro advanced against the dollar even after a report from the ZEW Center for European Economic Research showed German investor confidence unexpectedly decreased in October for the first time in three months. “A lot of people saw the weak ZEW as an opportunity to buy,” said John Hydeskov, a senior analyst in Copenhagen at Danske Bank A/S. The dollar’s decline to $1.50 “is definitely within reach,” he said. The EUR/USD is currently trading at $1.4855 as of 21:46PM London Time.

The British Pound fell against the euro on Tuesday after UK inflation data cemented the view interest rates would stay near zero, with concern about the UK's fiscal position also prompting traders to dump the pound. The data, which showed consumer prices rose just 1.1 percent in the year to September, came a day after Prime Minister Gordon Brown warned against hasty withdrawal of the monetary and fiscal stimulus introduced to foster economic recovery. Expectations rates will stay at record lows of 0.5 percent and that the Bank of England may extend its support programme of quantitative easing have pummelled the pound in recent months and are making traders pessimistic about its outlook.
"Today's CPI data suggests that the BoE won't hesitate to increase the asset-purchasing programme," said Hans-Guenter Redeker, chief currency strategist at BNP Paribas in London. The GBP/USD is currently trading at $1.5920 as of 21:52PM, London Time.

Canada’s dollar traded near the highest level in more than 14 months, approaching parity with its U.S. counterpart for the first time since July 2008 as investors sought higher-yielding assets. The U.S. dollar trimmed a drop versus the euro and yen after a large order to buy the greenback, traders said. Earlier the U.S. currency fell as much as 0.7 percent against the euro to touch $1.4876, the weakest value since August 2008. The USD/CAD is currently trading at 1.0315 as of 22:05PM, London Time.

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