Dollar at two-month low as Fed easing whispers start

Thu Oct 15, 2015 6:26am EDT
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By Marc Jones

LONDON (Reuters) - The dollar fell to its lowest since August after weak U.S. data and company results, while a two-month high for Asian indexes helped world shares bounce back from two days of losses.

Having obsessed for months about when U.S. interest rates will start to rise, traders began thinking that maybe, just maybe, they might have to fall again, given limp U.S. retail sales, the biggest producer prices falls in eight months and a $22 billion hammering for the world's biggest retailer Wal-Mart [.N]

The dollar had dropped like a stone overnight, testing $1.15 per euro EUR= and slicing down to 118.10 yen JPY=. [FRX/]

It found some support as European Central Bank policymaker Ewald Nowotny said that it was "quite obvious that additional sets of instruments are necessary" to bring euro zone inflation back towards percent.

"Markets are pricing out a Fed rate hike and the dollar is crashing," said Aurelija Augulyte, a senior FX strategist at Nordea in Helsinki.

"If you look at the very recent U.S. data there are signs of worry... If China doesn't recover and if the European data doesn't improve either there is a fair chance we could discuss further (Fed) easing," she added.

European shares snapped a three-day slide on the prospects of more central bank support. The regional FTSEurofirst 300 .FTEU3 rose 1 percent after Asian bourses, also hoping for stimulus from China and Japan, hit their highest since mid-August.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 2 percent as Shanghai shares .SSEC advanced 2.3 percent, Australian shares .AXJO nudged up 0.6 percent and South Korea's Kospi .KS11 climbed 1.1 percent.   Continued...

An employee of a money changer holds a stack of U.S.  Dollar notes before giving it to a customer in Jakarta, October 8, 2015.  REUTERS/Beawiharta