Dollar climbs amid questions about Fed program

AP News
|
Posted: Oct 27, 2010 3:51 PM
Dollar climbs amid questions about Fed program

The dollar strengthened Wednesday after concerns grew that the Federal Reserve's plans to buy Treasurys might be smaller and slower than traders anticipated.

Traders have been expecting that the Fed will announce a plan next week to swiftly buy U.S. Treasurys, with some estimating the purchases could top $1 trillion. However a report Wednesday in the Wall Street Journal said the bond-buying program could be smaller and stretched out over more months than expected.

Smaller and slower purchases helped the dollar regain some of its value Wednesday compared with the euro and Japan's yen. It was the second straight day the dollar rallied against the currencies.

The dollar had been hammered in recent weeks as investors expected the U.S. central bank to start buying government-backed bonds. The purchases are aimed at driving bond yields and interest rates lower. The lower yields make other currencies and investments more attractive than Treasurys and the dollar.

The euro bought $1.3761 in late trading in New York Wednesday, down from $1.3850 late Tuesday. The British pound fell to $1.5758 from $1.5835 against the dollar.

The dollar rose to 81.71 yen, compared with 81.49 a day ago.

The dollar also rose to 1.0298 Canadian dollars from 1.0246 Canadian dollars, and moved up to 0.9917 Swiss francs from 0.9861 Swiss francs.