Can you say, "inflation"?
from Fox News:
HONG KONG, Sept 30 (Reuters) - The dollar was stuck near aneight-month low on Thursday, hobbled by speculation of morequantitative easing from the Federal Reserve, while Europeanstocks took a breather after September's rebound.
The euro, initially steady against the dollar, was down 0.4percent on the day at $1.3578 after Ireland's central bank puta 34 billion euros ($46 billion) price on bailing out AngloIrish Bank under a worst case scenario.
Europe's major equity markets fell on Thursday, with thepan-European FTSEurofirst 300 index of top shares down 0.4percent after the Anglo Irish announcement and a Moody'sdowngrade of Spain's credit rating by one notch to Aa1.
The dollar is down 8.3 percent this quarter against abasket of world currencies, its worst quarter in more thaneight years, as a sluggish economy and stubbornly highunemployment levels in the United States have fuelledexpectations of another round of asset buying by the Fed.
"Speculation of QE2 lingers and is not going away any timesoon. That should keep the U.S. dollar under pressure," saidSue Trinh, senior currency strategist at RBC in Hong Kong.
Asian stocks ex-Japan fell 0.4 percent but hovered near atwo-year high and were set for their best quarter in a year asinvestors poured money into regional markets on the back ofrobust economic growth driven by China.
The MSCI index of Asia Pacific stocks outside Japan hasgained more than 17 percent this quarter, easily outperformingdeveloped markets, with the S&P 500 up 11 percent and Europeanshares up 7.2 percent.
For the year to date, the ex-Japan index is up around 7percent.
Japan's Nikkei ended 2 percent lower but still posted itsbest monthly performance in six, helped by expectations thatfurther easing would curb the yen's strength. On a quarterlybasis the Nikkei is flat, sharply lagging other major markets.
Mounting speculation that the Bank of Japan was preparingto ease monetary policy again and that it could take action atits meeting next Tuesday was keeping the yen's gains in check.
By the end of the Asian session, the dollar was at 83.38yen, just above a 15-year low set just before Japan intervenedto sell the yen on Sept. 15.
"The big turning point in September was intervention. Themove has helped to soothe fears about a further advance in theyen and put the stock market back on a recovery path," saidMasayuki Otani, chief market analyst at Securities Japan, Inc.
"Neither the United States nor Japan has changed theirstance towards easing policy, and that will likely support themarket. The domestic economy is seen slowing from now on, but asharp slowdown is unlikely and stock prices will likely move tofactor that in in advance and build on gains."
Gold ticked lower but held within sight of a record highhit in the previous session, underpinned by continued U.S.dollar weakness. Spot gold eased 60 cents to $1,308.15 by 0630GMT. (Additional reporting by Charlotte Cooper and Masayuki Kitanoin TOKYO; Editing by Alex Richardson)
