Dollar weakens, boosts US markets
May 14, 2015, 11:29 pm

The US dollar fell to a three-month low against a number of major currencies on Thursday; US markets soared in response [AP]

Global currency markets were also reacting to speculation that the US Federal Reserve would not begin introducing interest rate hikes for some time.

Interest rates were dropped to nearly zero since 2008 in tandem with quantitative easing that had the Fed buy back bonds at a rate of $85 billion a month.

As the US economy improved, quantitative easing was terminated in 2014 and experts began predicting a rate hike in mid-2015.

Now, experts believe that there is a chance the Fed may not touch interest rates until September, if not the beginning of 2016.

The possible delay in interest rate hikes, coupled with a weaker dollar helped boost US stocks with overseas sales.

The S&P 500 closed at a record high on Thursday hitting more than 2,121 – an overall growth of 3 per cent since January.

The Dow Jones industrial average and Nasdaq Composite followed suit with more than 1 per cent and nearly 1.4 per cent growth, respectively.

Meanwhile, the Euro appeared to have snapped back somewhat against the dollar on Thursday. This appeared to reverse a trend which saw the Euro drop to $1.045 in mid-March, rising to $1.14 this week.

The dollar also fell against the Sterling pound – from $1.46 at the end of March to $1.577 on Thursday close.

It has also fallen 5 per cent against the Canadian dollar.

The strengthening Euro indicates that the winter frenzy of buying dollars as investors moved from Europe to the then more lucrative US market may have now subsided.

Investors are returning to European markets, as fears of deflation also appear calmed, where the Eurozone economy outpaced the US in the first quarter of this year.

The BRICS POST with inputs Agencies