Euro hits 2-year low vs dollar after Fed minutes

AP News
|
Posted: Jul 11, 2012 3:50 PM
Euro hits 2-year low vs dollar after Fed minutes

NEW YORK (AP) — The euro plummeted to a two-year low against the dollar Wednesday after minutes from the Federal Reserve's last meeting suggested that policymakers are not considering any immediate plans for more bond purchases to help the economy.

The euro sank as low as $1.2211 after the minutes were released, its lowest point against the dollar since July 1, 2010. By late Wednesday, the euro was trading at $1.2228. It was worth $1.2254 late Tuesday.

According to the minutes, several Fed policymakers said during their June meeting that they would consider more stimulus, but only if the economy worsens. Traders interpreted that to mean that the Fed won't announce any bond buying next month.

The Fed has launched two rounds of bond purchases, most recently in August 2010, to lower long-term interest rates and make stocks more attractive to investors.

Lower interest rates can weigh on a currency by reducing the returns investors get from holding it. With a third round of bond-buying off the table for now, traders bought dollars.

Europe's debt crisis is also weighed on the euro. The euro has fallen about 6 percent so far this year against the dollar as the region's financial crisis spread to Spain. Boris Schlossberg, a currency strategist at BK Asset Management, said the euro could fall as low as $1.20 by the end of the month if more isn't done to ease Europe's debt crisis.

The dollar strengthened against most other currencies. The British pound fell to $1.5493 from $1.5509.

The dollar rose to 79.67 Japanese yen from 79.45 Japanese yen and to 0.9822 Swiss franc from 0.9801 Swiss franc.

The dollar fell to 1.0211 Canadian dollar from 1.0227 Canadian dollar.