FOREX-Dollar stumbles after Summers withdraws Fed candidacy
WELLINGTON, Sept 16 - The U.S. dollar stumbled broadly on Monday after Lawrence Summers withdrew from consideration to become the next chairman of the U.S. Federal Reserve, with investors seeing the move as prolonging the U.S. central bank's removal of its monetary stimulus.
In early Australasian trade, the dollar fell more than half a cent to around 98.61 yen, its weakest level in more than a week, after President Barack Obama in a statement on Sunday said that he had accepted the decision of Summers, a former top economic aide, to withdraw.
Against sterling, the dollar stumbled more than half a cent to an eight-month low of $1.5951 as investors dumped the currency on speculation that with Summers out of the running, the central bank would take longer to wind down its asset-buying programme, which has kept the U.S. dollar weak.
"It had been perceived that if Summers had come into the Fed, he'd have been more likely to remove U.S. policy accommodation quicker," said Sam Tuck, currency strategist at ANZ in Auckland.
"Now that he's withdrawn his name there's speculation that policy accommodation withdrawal will take longer."
Summers's announcement comes just before the U.S. central bank's policy meeting, on Sept. 17-18, when many traders and analysts expect the central bank to announce a modest $10 billion reduction to its $85 billion monthly bond-buying programme.
The euro hit a session high of $1.3377 against the broadly weak dollar from around $1.3305, while the U.S. dollar also suffered against the higher-yielding Antipodean currencies.
The New Zealand dollar rallied to $0.8234, its highest since mid-May, while the Australian dollar climbed roughly half a U.S. cent to $0.9345.