|
 Republicans rode a wave of voter discontent to seize control of the
U.S. Senate in a punishing blow to President Barack Obama that will
limit his political influence and curb his legislative agenda in his
last two years in office.
"In our view, there is an incentive to find some common ground for
the Republicans now that they have a majority in Congress, with
their eyes on the next Presidential election in two years," said
Susanne Galler, currency strategist at Jefferies. "We see the
election result as dollar positive."
The dollar will take cues from the ADP private sector employment and
non-manufacturing ISM data due later in the day. Both should offer
insight into Friday's non-farm payroll employment report and any
further signs of a labour recovery should bolster the dollar,
traders said.
The dollar rose to 114.60 yen, its highest level since
December 2007, and last traded at 114.50, up 0.9 percent. The dollar
index soared to 87.575 , its highest in more than four years.
The yen, which hit a 30-year low against the Swiss franc, was also
weighed down by comments from Bank of Japan Governor Haruhiko
Kuroda, who said the central bank is ready to do more to hit its 2
percent price goal and boost the economy.
Kuroda stressed the BOJ is determined to do whatever it takes to hit
the inflation target in two years and vanquish nearly two decades of
grinding deflation.
The yen and the euro's weakness saw the dollar index soar to 87.575,
its highest in more than four years.
EURO'S STRUGGLES CONTINUE
The euro's struggles continued a day ahead of a European Central
Bank meeting, hitting a two-year low against the Swiss franc.
The euro fell to a low of 1.2033 francs <EURCHF=>, not far from the
Swiss central bank's floor of 1.20 francs imposed in September 2011.
Swiss inflation data showed a threat of deflation, and that is
likely to put pressure on the Swiss National Bank (SNB) to intervene
in the currency market to weaken the franc.
With Switzerland due to hold a referendum called by the People's
Party on Nov. 30 on whether to prevent the SNB offloading its gold
reserves and oblige it to hold 20 percent of its assets in gold, the
currency is likely to come under additional pressure.
[to top of second column] |
While polls indicate the Swiss will vote against the initiative, the
risk of a 'Yes' vote is making markets nervous as it would give the
SNB much less flexibility to buy foreign currency to defend the cap.
"The currency pair is rapidly approaching levels at which SNB
intervention might become necessary again," said Esther Reichelt,
currency strategist at Commerzbank. "In the run-up to the referendum
on stricter rules for SNB gold reserves, that is likely to be a most
unwelcome development for the SNB."
Against the dollar, the euro lost 0.5 percent to $1.2485 after a
short-covering rally on Tuesday fizzled out. The rally was prompted
by a Reuters report that quoted ECB sources as saying colleagues of
President Mario Draghi were unhappy with his management style.
The ECB meets on Thursday and is expected to hold off on fresh
policy action despite more evidence of a struggling economy.
Data on Wednesday showed euro zone business growth picked up less
than expected in October, while retail sales were much weaker than
expected in September.
With the Bank of Japan unexpectedly easing policy last week, pushing
the yen sharply lower, the onus is on the ECB to take further easing
measures in a bid to cheapen the euro and boost growth and
inflation.
(Editing by Dominic Evans and Susan Fenton)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
