Dollar Falls, Fed Less Likely To Raise Rates

The dollar suffered sharp falls on Thursday, hit by reports of weak US business activity and a benign inflation picture. The euro rose 0.7 per cent against the dollar to $1.3247 by late afternoon in New York. Sterling rose to its highest level against the dollar since its ejection from the European Exchange Rate Mechanism in September 1992 as UK house prices continued to show rapid growth. A report revealed that inflation in US personal consumption expenditure excluding food and energy, the Federal Reserve’s preferred inflation benchmark, held steady in October at 2.4 per cent year-on-year. Data suggested further inflation-fighting interest rate rises by the Fed, which could support the dollar, were even less likely to be needed.