Dollar Falls Against Majors

The dollar fell broadly against most currencies after the Fed’s beige book report showed that the US economy still faces significant challenges. Although the report showed some improvement the US economy Fed rates are likely to remain low for an extended period. Kathy Lien of GFT Forex stated, “The U.S. economy is chugging along, albeit at a slow pace, and that means the Federal Reserve has no real urgency to raise interest rates.” The ICE Dollar Index was down from 77.011 at 76.875.

Ongoing Greek Fiscal Problems

The euro fell 0.2% to $1.4477 down from $1.4510 on Wednesday. European Central Bank President Jean-Claude Trichet said that the outlook for the euro zone is uncertain and that Greece’s economic problems would not receive special treatment. Greece’s fiscal problems have pressured the euro in recent trading sessions. The government of Greek Prime Minister George Papandreou approved a plan to reduce the country’s deficit below the European Union’s budget limit in 2012. Trichet said that, “no government, no state can expect special treatment.” The ECB left rates at 1% which most analysts had expected. Trichet’s remarks have led many experts to believe that Greece can expect no help from the EU. German Chancellor Angela Merkel questioned the fiscal policies of other EU nations. In an interview with the German newspaper Die Welt Merkel said, “The Greek example can put us under great, great pressures,” she said, according to the transcript. “Who will tell the Greek parliament to please go ahead and pass a pension reform? I don’t know that they’ll be enthusiastic about Germany giving them instructions.”

Aussie Gains on Employment Report

The Aussie rose broadly after the Australian statistics bureau reported that Australian employers added 35,200 jobs in December. Most traders predict that the Reserve Bank of Australia will raise its present rate of 3.75 by a quarter of a percentage point.