The US dollar ended the past trading week mixed, gaining on some currencies and falling versus others. While the unexpectedly dovish Federal Reserve hurt the currency strongly, it had some support from risk aversion. The same risk-off sentiment made other safe-haven currencies, like the Japanese yen and the Swiss franc, clear winners for the week.
The Fed held a monetary policy meeting this week. While the central bank left monetary policy unchanged, as was widely expected, it also dropped plans to hike interest rates this year, shocking markets. Furthermore, the Fed downgraded its economic projections.
The downgrade of the economic outlook by the Fed, coupled with terrible macroeconomic data in the eurozone, sparked fears of another global economic recession. That gave strength to safer currencies. Surprisingly, commodity currencies did not perform bad either, with the Australian dollar holding its ground versus the greenback and the New Zealand dollar even gaining on the US currency. The Canadian dollar was an exception, falling following the retreat of crude oil prices.
EUR/USD ended the week at 1.1301 after opening at 1.1323 and rallying to the weekly high of 1.1448. USD/JPY slumped from 111.47 to 109.93 over the week. NZD/USD gained from 0.6844 to 0.6873, and its weekly maximum was at 0.6937.
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