Investing.com - The U.S. dollar dropped against its major counterparts Thursday, after the Federal Reserve vowed to keep rates low until late 2014 and strong U.S. economic data fuelled a risk embrace.
During late session U.S. trade, the dollar slipped lower against the euro, with gaining 0.16% to hit 1.3128.
Durable goods orders climbed 2.1% beating expectations in the U.S.
The U.S. dollar fell to a five week high low after Fed Chief Ben Bernanke stated yesterday, “We are prepared to provide further monetary accommodation if employment is not making sufficient progress toward our assessment of its maximum level, or if inflation shows signs of moving further below its mandate consistent rate. Bond buying is an option that’s certainly on the table.”
In addition to the Fed’s vow to keep interest rates low until at least late 2014.
Alan Ruskin of Deutsche Bank explained to Bloomberg, “The Fed’s statement reinforced trends that were equity bullish and the risk on trade. The extent of the rally will ultimately be defined by European events, rather than the U.S.”
News that the cost of insuring against default in European corporate debt dropped to the lowest in nearly five months adding to the euro positive sentiment.
Meanwhile in Greece, unsubstantiated reports that private creditors will submit a new offer with an average interest rate of 3.75% on bonds as part of a debt restructuring; helped fuel the euro’s advance.
Earlier,in the U.S. data showed that pending home sales fell more than expected last month, after climbing to a 19 month high in November.
A report showing that business confidence had improved more than expected in January worked to lift the euro.
The greenback traded lower against the pound, with advancing 0.28% to hit 1.5700.
In the U.K. data showed that retail sales volume dropped to the lowest level since March 2009, with retailers expecting additional weakness in February.
Elsewhere, the greenback was lower against the yen and the Swiss franc with falling 0.38% to 77.49 and falling 0.12% to hit 0.9204.
Earlier in the week, Japan posted its first trade deficit in 31 years for 2011, however the Bank of Japan stated that exports are likely to increase as worldwide recovery takes hold.
.In addition the greenback was lower against its Canadian, Australian and New Zealand counterparts with falling 0.32% to hit 1.0011, climbing 0.24% to hit 1.0622 and adding 0.26% to 0.8190.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.07% to hit 79.54.
In other news, the World Economic Forum’s five day meeting is in session in Davos, Switzerland.