The dollar moved down to its worst state in more than two weeks against the euro as the exit of former Treasury Secretary Lawrence Summers from the race to lead the Federal Reserve diminished assumptions for an early end to expansionary financial policy. The greenback retreated against all of its Group of 10 currency counterparts after U.S. President Barack Obama announced in a statement he accepted the withdrawal. Obama had stated Summers and Fed Vice Chairman Janet Yellen as promising candidates to be the head of the central bank after Ben S. Bernanke's term as chairman expires Jan. 31, with policy makers preparing to trim down bond purchases, known as quantitative easing. The yen backslide versus the growth-sensitive currencies of Australia and New Zealand as the U.S. establish support for a plan to eradicate Syrian chemical weapons. Summers Letter “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing recovery,” Summers wrote in a letter dated yesterday to President Obama. Taper Prospects The Fed is forecast to begin dialing back its unprecedented stimulus program as early as this week. The Federal Open Market Committee will slow its monthly asset purchases to $75 billion from $85 billion at a two-day meeting that starts tomorrow, according to a Bloomberg News survey of economists on Sept. 6. Draghi Dovish Gains in the euro may be limited before European Central Bank President Mario Draghi speaks in Berlin today. Draghi said on Sept. 12 that policy makers are committed to keeping interest rates low for an extended period and the economy doesn’t justify the rise in some money-market rates. “Draghi will remain dovish, capping rallies in the euro,” said Mansoor Mohi-uddin, the Singapore-based head of currency strategy at UBS AG. “Provided the Fed starts tapering as we expect at this week’s FOMC meeting, the greenback is likely to start experiencing a broader-based dollar rally.” The dollar has depreciated 1.2 percent in the past week, the biggest decline among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The yen is down 0.3 percent and the euro has missed 0.2 percent. Asian stocks climbed as U.S. Secretary of State John Kerry tries to build support for a plan to find, secure and destroy Syria’s chemical weapons. He will meet with French President Francois Hollande and the foreign ministers from France and the U.K. after negotiating an accord with Russian Foreign Minister Sergei Lavrov. The MSCI Asia Pacific Excluding Japan Index gained 1.4 percent. Australia’s dollar spiked 1 percent to 93.38 U.S. cents. New Zealand’s currency upgraded 0.8 percent to 81.99 cents.
