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Forex - Dollar slumps in U.S. afternoon trade; USD/JPY sinks to all-time low

Published 10/21/2011, 03:46 PM
Updated 10/21/2011, 03:49 PM

Investing.com - The U.S. dollar moved lower against its major counterparts in U.S. trade Friday, with USD/JPY setting a record low, as hopes for a settlement on European debt among euro-zone officials cooled interest in the safe-haven greenback.

In afternoon U.S. trade, the greenback was lower against the euro, with EUR/USD gaining 0.60% to hit 1.3863.

In early Friday trade, USD/JPY fell to an all-time low, hitting 75.82, and prompting speculation of another market intervention from the Bank of Japan to weaken the local currency, as export firms in Japan suffer when repatriating overseas profits.

Bank of Japan Governor Masaaki Shirakawa said Friday that tensions caused by Europe’s debt crisis appeared to be easing but that the central bank was closely monitoring risks to the market.

Meanwhile, finance ministers from the euro-zone’s 17 nations convened in Brussels Friday to discuss boosting the current USD607 billion European Financial Stability Facility, but a rift remained between Germany and France on how best to maximize the fund’s impact.

France has pushed for the use of additional money to come from the European Central Bank, while Germany argued that such a move would violate an EU treaty prohibiting the financing of governments.

“We will stick to the situation as it is in the treaty, that the central bank is not available for state financing,” German Finance Minister Wolfgang Schaeuble said before Friday’s meeting.

Last week officials from both countries set Sunday as a deadline for formulating a plan, but announced adding a second meeting next Wednesday to formally outline details of an agreement.

Meanwhile, European Commissioner for Economic and Financial Affairs, Olli Rehn, said Friday that Greece would be receiving its next tranche of aid in November, provided that the Greek Parliament passes a savings and reform package as promised.

In late afternoon U.S. trade Wall Street shares sustained gains garnered earlier in the session, the Dow Jones Industrial Average was up 1.97% to 11,769.70, the Nasdaq Composite Index rose 1.21% to 2,629.98, and the S&P 500 advanced 1.6% to trade at 1,234.84.

Meanwhile, the greenback was down against the British pound, with GBP/USD adding 0.98% to hit 1.5949. 

The dollar was lower against the Swiss franc with USD/CHF down by 1.12% to hit 0.8838. The dollar was down against the Japanese yen, with USD/JPY falling 0.85% to hit 76.14.

The greenback was lower against its Canadian, Australian and New Zealand counterparts with USD/CAD down 0.62% to hit 1.0091, AUD/USD higher by 1.01% to hit 1.0333, and NZD/USD advancing 1.15% to hit 0.8020.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.81% at 76.60.

Finance Ministers from all 27 European countries were set to join euro-zone ministers in Brussels on Saturday, followed by the additional summit on October 26.



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