The U.S. dollar fell across the board overnight as rising global equities, probable European Central Bank bond purchases and a pending stalemate over U.S. debt reduction weighed on the greenback. Some analysts believe the U.S. dollar could be under pressure in the coming days as a deadline of November 23rd approaches for the so-called U.S. deficit-reduction super committee to agree to measures to cut spending. If the panel remains deadlocked past the deadline, at least $1.2 trillion in automatic spending cuts would take effect in 2013 and would be split between defense and domestic discretionary programs. Later this morning, leading indicators are expected to register at 0.6% for the month of October, up from 0.2% the month prior. With falling bond spreads in the Euro-zone and American equity futures pointed towards a higher open, the U.S. dollar could remain under pressure heading into the weekend.
The Euro pulled back from 6-week lows against the U.S. dollar amid speculation the European Central Bank was purchasing Italian and Spanish bonds today. Indeed, the ECB bought Italian government bonds today according to five people with knowledge of the trades, who declined to be identified because the transactions are private. Three said the central bank also bought Spanish debt. The yields on both Italian and Spanish two-year bonds dropped. Meanwhile, German producer prices rose 0.2% from the month prior, higher than the 0.1% forecast by economists. There was no other major economic data released in the Euro-zone today.
The British pound pushed higher versus the U.S. dollar as demand waned for the safe-haven U.S. dollar. However, the sterling is still headed for a weekly loss against the greenback. The pound rose even after the Financial Times reported that Bank of England policy maker Martin Weale said there’s a “very strong case” for adding more stimulus to the U.K. economy unless the outlook improves. “If things evolve as the forecasts suggest” so called quantitative easing could be steeped up in February, Weale said.
