The US dollar fell today after the Federal Reserve trimmed its monetary stimulus but lowered the growth forecasts and predicted that interest rates will remain extremely low for a long period of time.
The Fed cut its monthly asset purchases by $10 billion to $35 billion dollar, a move that was widely expected by traders. The central bank reduced its projections for economic growth in 2014 to 2.1–2.3 percent from its previous estimate of 2.8–3.0 percent. Regarding interest rates, the Fed said:
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committeeâs 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.
Such outlook is not particularly positive for the dollar, and economic data was not helpful either. The US current account deficit widened from $87.3 billion the fourth quarter of last year to $111.2 billion in the first quarter of this year, more than was expected.
EUR/USD jumped from 1.3547 to 1.3587 as of 23:09 GMT today. GBP/USD advanced from 1.6964 to 1.6989 after touching the daily low of 1.6920. USD/JPY was down from 102.14 to 101.93, retreating from the daily maximum of 102.35.
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