The US dollar fell versus the Japanese yen and also declined against the Great Britain pound and the euro, remaining above the opening level though, after the Federal Reserve decided to keep the interest rates at the record low level.
The Federal Open Market Committee announced in its statement today:
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
It also said that “the pace of recovery in output and employment has slowed in recent months” and the household spending “remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit”, “investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract”.
The dovish sentiment of the Fed was passed to the investors. Not that it was very hawkish previously, considering all the bad reports in the last month.
EUR/USD fell to 1.3180 from 1.3219 as of 20:23 GMT today after dropping as low as 1.3074. GBP/USD declined to 1.5855 from 1.5892, following the decrease to 1.5709. USD/JPY dropped from 85.93 to 85.41.
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