- POSTED: 17 Sep 2013 05:46
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The US dollar ended lower on Monday after the weekend's surprise announcement that relative rate-hawk Larry Summers withdrew from consideration to lead the US Federal Reserve.
NEW YORK: The US dollar ended lower on Monday after the weekend's surprise announcement that relative rate-hawk Larry Summers withdrew from consideration to lead the US Federal Reserve.
But the greenback pulled off its lows as the Summers move left a mystery the White House choice to replace Fed Chairman Ben Bernanke, and speculation grew over whether the central bank will begin reducing its stimulus program after its Tuesday-Wednesday policy meeting.
At 2100 GMT, the euro was $1.3337, compared with $1.3298 late Friday.
The dollar fell to 99.11 yen from 99.35 yen, and the British pound rose to $1.5897 from $1.5872.
The dollar also slid to 0.9272 Swiss franc from 0.9289 franc.
Meanwhile, the euro was slightly higher against the Japanese currency at 132.20 yen, compared with 132.11 Friday.
Summers, widely believed to be President Barack Obama's pick for the job, had been expected to lead the Fed toward a tighter monetary policy stance than Bernanke has held.
But he pulled his name out on Sunday after facing stiff opposition from members of Obama's own Democratic Party, as well as from Republicans.
"That potentially increases the chance that current Fed Vice Chairman (Janet) Yellen will be nominated instead, and with Yellen generally viewed as unlikely to seek a rapid adjustment to the Fed's policy stance, US bond yields and the US dollar are both lower," said Nick Bennenbroek, managing director at Wells Fargo Securities.
Even so, the greenback pulled off its lows Monday as the markets became less convinced of what the move means for monetary policy and interest rates.
The policy-making Federal Open Market Committee meets on Tuesday and Wednesday widely expected to begin ratcheting down its bond-buying stimulus program.
But with the economy still not clearly strong, and Obama facing tough battles with Congress over the budget and the borrowing ceiling over the coming weeks, some think the Fed might not opt for any dramatic move.
Data on US industrial production in July and August released on Monday showed growth in the sector still unsteady.
"Strong headwinds over the past few quarters, including the sequester and growth issues in both Europe and China, have made it difficult for the recovery to gain momentum," said Erik Johnson at IHS Global Insight.
"But the eurozone is expanding again, and this will support manufacturing activity over the next few quarters," he added.