Dollar Hits Another 7-Year High Versus Yen As GOP Takes Congress
Washington (Nov5) The dollar continued its dramatic upswing against the yen Wednesday, rising to a fresh 7-year high as Republicans took control of the US Senate .
A number of Republicans have been critical of the Federal Reserve keeping interest rates so low for so long while the central bank's balance sheet ballooned to USD4.5 trillion .
Analysts say pressure from lawmakers might compel the Fed to raise interest rates ahead of schedule next year.
Dallas Fed President Richard Fisher is already warning about GOP interference in monetary policy.
"Think about this: Here's a Congress that can't even get its own budget together. Do you want them running the central bank?" Fisher said this morning in Bloomberg TV.
In economic news, private sector employment in the US increased by slightly more than anticipated in the month of October, according to a report released by payroll processor ADP on Wednesday.
ADP said the private sector added 230,000 jobs in October following an upwardly revised increase of 225,000 jobs in September.
The dollar jumped to Y114.83 versus the yen, having risen sharply since last week when the Bank of Japan unexpectedly boosted its economic stimulus.
Early gains took the dollar to USD1.25 from USD1.2550 versus the euro. Last week, the dollar touched a 2-year peak of USD1.2440 , but has come no further amid signs the European Central Bank will delay full-scale quantitative easing.
Dismal European economic data has failed to give the dollar much of a push this week.
Euro zone retail sales fell 1.3% in September from last month, reversing a 0.9% rise in August. Sales were expected to fall moderately by 0.8%.
Separate data showed that the Eurozone private sector expanded slightly less than initially estimated in October. The final Markit composite output index rose to 52.1 in October from 52 in September.
Meanwhile, the German composite PMI came in at 53.9 in October. In September, the index was at 54.1.
The dollar was steady near USD1.60 versus the sterling, little changed from the previous session.
UK service sector growth slowed more than expected to a seventeen-month low in October, survey results from Markit Economics and the Chartered Institute of Purchasing and Supply showed. The PMI fell to 56.2 in October from 58.7 in September, less than the 58.5 score expected by economists.
Source: RTTnews
