Dollar pummeled after Singapore widens FX band
The U.S. dollar index hit the year's low on Thursday while the Australian dollar flirted with parity after Singapore widened its currency's trading band, piling more pressure on to the struggling greenback. The Australian dollar, which boasts the highest yield among major currencies, soared to a 28-year peak at $0.9994 as investors continued to dump the U.S. dollar on expectations the Federal Reserve will again start printing money next month. With interest rates at record lows in developed markets, yield-hungry investors are piling cash into emerging markets. The tide of money is rising ahead of an anticipated second round of quantitative easing by the Fed. "Effectively the Singapore move is a tightening of policy and it clearly shows Asian economies are at the opposite end of the spectrum compared to the spare capacity in the U.S. economy," said Chris Turner, head of FX strategy at ING.