The Dollar Takes a Beating
NEW YORK -- Poor U.S. economic data continued to argue for an ultraloose U.S. monetary policy Thursday, weighing the dollar down against currencies with more appealing interest-rate outlooks.</br></br>"We believe the continued negative data that we are witnessing will push out Fed exit action well into 2012 and possibly 2013," said Douglas Borthwick, managing director of Faros Trading in Stamford, Conn.</br></br>The sour data even caused the dollar to give up all of its gains to the yen -- on the same day Japan released much worse-than-expected gross-domestic-product data stemming from the March earthquake and tsunami.</br></br>The divergence in currencies' interest-rate scenarios were illustrated in the comments of two central bankers.</br></br>Federal Reserve Bank of Chicago President Charles Evans confirmed a loose monetary environment in the U.S. when he said higher food and energy prices aren't expected to translate into sustained inflationary pressure and that the bank should retain "substantial" monetary accommodation for some time. Meanwhile, European Central Bank Executive Board member Gertrude Tumpel-Gugerell said the ECB must unwind its nonstandard monetary-policy measures as financial conditions improve, a signal for interest-rate increases down the road.