Yen, sterling, greenback all weaker

Story link: Yen, sterling, greenback all weaker

Sterling and the US dollar both weakened on Wednesday after moves by their respective central banks.

The greenback fell after Tuesday’s decision by the Federal Reserve to cut interest rates by 0.5 percent, a bigger cut than had been realistically expected by most analysts and investors.

The dollar dropped to as low as $1.3987 in relation to the euro during the day, near its all-time low reached Tuesday, but it came back slightly to trade virtually unchanged from yesterday’s close at $1.3960 to the euro.

Meanwhile the dollar index, which tracks the US currency against a basket of six other major currencies, dropped to 79.091, its lowest in 16 years.

The pound declined after the Bank of England said it would inject liquidity into the money markets only a week after the Bank’s governor said that doing so would only cause bigger problems later on.

In midday trade in New York, sterling was 0.5 percent lower to ¥232.50 in relation to the yen, while it had dropped 0.6 percent against both the euro and the US dollar, to £0.6985 and $1.9990 respectively.

The yen was also weaker as investors once again embraced risk as equities markets gained in response to the rate cut in the United States, dropping 0.1 percent versus the dollar and the euro to ¥115.25 and ¥162.30 respectively while it fell 1 percent to ¥85.24 against the New Zealand dollar.