Dollar sharply up, as markets digest Fed's statement

Dollar sharply up, as markets digest Fed's statement

19 March 2015, 13:17

On Thursday the dollar rose sharply against its peers, as markets digested yesterday's Fed statement.

The euro lost ground against the dollar, with EUR/USD plummeting 1.60% to 1.0694.

On Wednesday the Fed indicated that U.S. economic growth has moderated and that interest rates will rise at a slower pace than previously forecast. The body also downgraded its forecasts for growth and inflation.

The bank also added that the change in its forward guidance did not mean it has decided on the timing for an initial rate increase.

USD/CHF jumped 1.14% to 0.9894 and EUR/CHF slid 0.42% to trade at 1.0582 after the Swiss National Bank said it was keeping its benchmark interest rate unchanged at minus 0.75%, in line with market expectations. The SNB left the target range for the three-month Libor unchanged at between minus 1.25% and minus 0.25%.

The Swiss franc continued to be "significantly overvalued" and added that it will "remain active in the foreign exchange market, as necessary, in order to influence monetary conditions," the SNB said in a statement. It also reduced forecasts for inflation and growth from its December forecast.

The dollar was also higher against the yen and the pound, with USD/JPY gaining 0.41% to 120.60 and with GBP/USD sliding 0.57% to 1.4895.

The commodity-exposed Australian, New Zealand and Canadian dollars were broadly weaker, with AUD/USD tumbling 1.15% to 0.7682 and NZD/USD down 0.92% to 0.7416, while USD/CAD jumped 0.90% to 1.2675.

Official data earlier showed that New Zealand's gross domestic product expanded at a rate of 0.8% in the fourth quarter of 2014.

Investors expect the US to release data on jobless claims, the current account and manufacturing activity in the Philadelphia region later in the day.

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