Dollar Falls Before U.S. Central Bank Considers Further Stimulus

The dollar weakened against most its major counterparts amid better-than-forecast factory data from China and bets the U.S. central bank will add to monetary stimulus.

The U.S. currency fell versus the euro and the yen before the Federal Reserve starts a policy meeting tomorrow amid forecasts it will expand bond-buying plans. Japan’s currency touched the highest in almost two weeks versus the euro after Italy’s Prime Minister Mario Monti said he intends to resign. Mexico’s peso advanced after a report showed exports increased 13 percent from a year earlier.

“You’re starting to see a slight divergence appear in the currency markets, as the Chinese data remained quite favorable,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “Despite what is happening in Italy, markets are still relatively calm. People are looking ahead to the Federal Reserve this week, which should be an event that is positive for risk and negative for the dollar.”

via Bloomberg

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