Sterling, euro gain on dollar after Fed announces taper
The dollar lost ground on the euro and sterling on Thursday after the U.S. Federal Reserve said it would not rush to raise interest rates even as it began unwinding its pandemic-era stimulus.
The Fed, on Wednesday, announced a $15 billion monthly cut to its $120 billion in monthly purchases of Treasuries and mortgage-backed securities, but chair Jerome Powell said the U.S. central bank would be “patient” in deciding when to raise its benchmark overnight interest rate from near zero levels. read more
The euro rose to $1.1614 also having rallied on Wednesday after the announcement, gaining 0.29% that day.
“The Chairman stressed that this (Federal Open Market Committee) meeting was much more about (quantitative easing) than interest rates but this will be the last meeting in which that reasoning will hold. From here on, future FOMC meetings are going to return the focus back to the Fed’s interest rate strategy and tactics,” said Paul O’Connor, head of multi asset at Janus Henderson Investors in emailed comments.
Unlike the Fed, where the market and observers were all but certain it would taper stimulus on Wednesday, there is less consensus around the BofE’s decision read more
The yen stayed soft, however, with one dollar at 114.04 yen within a good leap of the dollar’s multiyear high of 114.69 hit last month.