Dollar stands tall after Fed's optimistic economic view
Credit: Reuters/Kim Hong-Ji
U.S. one-hundred dollar bills are seen in this photo illustration at a bank in Seoul August 2, 2013.
The Federal Open Market Committee released a statement after its two-day meeting that underscored the improving U.S. labor market, but said interest rates would remain low for a 'considerable time.'
The statement largely dismissed recent financial market volatility, European growth challenges and a weak inflation outlook. The central bank ended its monthly bond purchase program as widely expected, pushing up U.S. yields and increasing the greenback's appeal.
'We maintain our view the first rate hike will be in June 2015, based on continued labor market tightening,' strategists at Barclays said in a note to clients.
The yield on benchmark 10-year Treasury notes stood at 2.312 percent in early Asian trade, not far from its U.S. close of 2.323 percent, after rising for six of the past seven sessions.
The dollar index .DXY, which measures the U.S. currency against a basket of six major rivals, edged up to 86.026, after touching a three-week of 86.045 in the wake of the Fed's announcement.
The dollar edged slightly lower on the day against the yen to 108.84, but was still close to a three-week high of 108.97. The euro was steady at $1.2632 after touching a fresh one-week low of $1.2625 earlier in the Asian session.
The New Zealand dollar, meanwhile, fell sharply after that country's central bank sounded a bit more dovish following a widely expected decision to leave interest rates unchanged.
The kiwi, already under pressure against a firmer U.S. dollar, dropped to a session low around $0.7777 from $0.7820. It last traded at $0.7778, down about 0.3 percent.
Brazil's real BRBY jumped to a two-week high of 2.435 against the dollar, after that country's central bank raised interest rates on Wednesday. The move shocked investors who had expected policymakers to stay put until President Dilma Rousseff unveils policy changes following her narrow re-election victory on Sunday.
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