Dollar mixed in Asian trade

The US dollar was mixed in Asian trade Thursday as the latest shakeup in President Barack Obama’s economic team added to pressure on the currency, analysts said.

The greenback had already taken a hit Wednesday after the US Federal Reserve held interest rates at record lows and said that recovery in the world’s biggest economy was “modest”.

While it shied away from a new — and controversial — round of spending, the Fed said it will continue to monitor the outlook and was prepared to provide additional stimulus measures if necessary to keep the economy on track.

The dollar was slightly higher at 84.56 yen from 84.55 yen in New York trade late Wednesday. The euro eased to 1.3401 dollars from 1.3406 in New York and was trading at 113.32 yen from 113.20.

Japanese financial markets were closed for a public holiday.

“The Fed’s desire to provide assurance at this time should not come as a surprise. The direction of economic policy has been blurred by the top profile resignations in the White House economic team,” DBS Bank said in a commentary.

It said the Obama administration could face difficulty in pushing for more fiscal stimulus measures if the Democratic Party suffers huge losses during mid-term elections in November.

Lawrence Summers, seen as one of the main architects of Obama’s economic policy, announced Tuesday he would leave at the end of the year to return to teaching at Harvard University.

His plans to leave came follow the resignations of Christina Romer, chair of the White House Council of Economic Advisors, and budget director Peter Orszag.

Herb Allison, the senior Treasury Department official responsible for running the government’s management of hundreds of billions of dollars in toxic assets, also said he would step down on Wednesday.

Other analysts said the US economic outlook remains weak.

“With further monetary stimulus likely to be ineffective and fiscal policy paralysed by bipartisan disagreement, a number of years of weak economic growth and high unemployment look inevitable,” said Capital Economics economist Paul Dales.