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Dollar slides as Summers drops out of race for Fed chair
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The US dollar slid while bonds and shares rallied in Asia today after Lawrence Summers dropped from the race to be head of the US Federal Reserve, according to Reuters.
Investors wagered that Fed policy would stay easier for longer under the other main candidate, Janet Yellen.
The surprise news comes just before the central bank meets on Tuesday and Wednesday to decide when and by how much to scale back its monthly asset purchases from the current pace of US$85 billion.
Markets had perceived Summers as less wedded to aggressive policies such as quantitative easing and more likely to scale it back quicker than the more dovish Yellen, who is currently second in command at the Fed.
The reaction was immediate with the euro jumping over half a US cent to US$1.3367 in early trade, its highest in almost three weeks. The dollar likewise slid half a yen to 98.85 and dropped on sterling and the Swiss franc.
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