Dollar falls after Euro zone, Britain leave rates unchanged

09:33, October 09, 2009      

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The dollar fell against major currencies on Thursday after the European Central Bank (ECB) and the Bank of England (BoE) decided to leave their benchmark interest rates unchanged.

The ECB kept its key rate at 1 percent while the BoE left key rate at 0.5 percent, both historically low levels. Neither of the central banks made major changes on their fiscal and monetary stimulus policies, in line with expectations.

The euro area economy is stabilizing and is expected to recover at a gradual pace, ECB President Jean-Claude Trichet said after the meeting. But he warned that uncertainty remains high and the recovery is expected to remain rather uneven.

U.S. initial claims of jobless benefits fell to 521,000 last week, the Labor Department reported. It was the lowest level since the first week of January. The four-week average of initial claims and the overall number of people receiving benefits also fell. The report provided further evidence that U.S. labor market is gradually improving.

Risk appetite in currency trading was also boosted by an unexpectedly quarterly profit of Alcoa. The U.S. largest aluminum product earned 77 million dollars in the third quarter, after three consecutive quarterly losses. It is a positive start of the coming earning reports season, lifted hopes that U.S. industrial companies are coming out of recession.

The euro bought 1.4778 dollars in late New York trading compared with 1.4671 dollars it bought late Wednesday. The pound rose to 1.6067 dollars from 1.5938 dollars.

The dollar fell to 1.0516 Canadian dollars from 1.0637 Canadian dollars, and fell to 1.0272 Swiss francs from 1.0342 Swiss francs. It fell to 88.52 Japanese yen from 88.63 Japanese yen. 

Source: Xinhua
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