The U.S. dollar was weak against most major currencies on Wednesday, weighed down by the Federal Reserve’s decision to cut interest rates.
The dollar index, which was moving along the flat line for much of the session till the Federal Reserve came out with its rate call, initially climbed higher after the Fed cut rates and signaled a pause in easing cycle.
However, the dollar retreated subsequently, falling from 98.00 to 97.50, netting a loss of 0.2%.
The Fed announced its widely expected to decision to lower the target range for the federal funds rate by 25 basis points to 1.5% to 1.75%.
The quarter point rate cut follows two matching moves at the Fed’s meetings in September and July, which marked the first rate cuts in over a decade.
However, the Fed’s accompanying statement removed a key line indicating the central bank would continue to “act as appropriate to sustain the expansion.”
The line was included in each of the Fed’s three previous statements and was seen as pointing toward a near-term rate cut.
The Fed said it would continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.
Against the euro, the dollar was quoting at 1.1147, compared to previous close of 1.1111.
Eurozone economic confidence eased to a near five-year low in October suggesting that the single currency bloc entered the fourth quarter on a weak footing.
The economic sentiment index dropped to 100.8 in October from 101.7 in the previous month, survey results from the European Commission showed.
The pound sterling was up at $1.2903, from Tuesday’s close of $1.2868.
Against the Japanese Yen, the dollar was down slightly with a unit fetching 108.84 yen. On Tuesday, the Japanese currency had settled at 108.88 a dollar.
The Aussie was gaining nearly 0.5% at 0.6898
The dollar was down notably against Swiss franc and loonie as well. The dollar-franc pair was at 0.9895.
The dollar was quoting at 1.3163 against the loonie after the Bank of Canada left its key rate unchanged and downgraded its growth forecast for next two years amid worsening global economic conditions.
The BoC kept its key rate unchanged at 1.75%, as expected.
The bank said that economic growth is likely to slow in the second half of this year, reflecting trade uncertainty, continuing adjustment in the energy sector, and the unwinding of temporary factors that boosted growth in the second quarter.
The material has been provided by InstaForex Company – www.instaforex.com