Investing.com - The dollar traded largely lower as investors
opted to go long on stocks after the Federal Reserve confirmed
market expectations for monetary stimulus programs to end this
year, likely in October.
In U.S. trading on Wednesday, EUR/USD was up 0.25% at
The Federal Reserve said in the minutes of its monetary policy
meeting earlier that it should end its monthly bond-buying program
by the end of this year, likely in October, which sent investors
chasing stocks on sentiments that the economy is recovering.
The Fed is currently buying $35 billion in Treasury and mortgage
debt a month to spur recovery, a monetary policy tool known as
quantitative easing that aims to stimulate the economy by
suppressing long-term interest rates.
The stimulus program aims to entice investors out of safe-haven
asset classes like the U.S. dollar and into equities with the hope
investing and hiring follow.
The Fed has gradually been trimming the amount of bonds it
purchases by $10 billion a month, and by end of this year, the
program should close if the Fed continues to taper on its current
"While the current asset purchase program is not on a preset
course, participants generally agreed that if the economy evolved
as they anticipated, the program would likely be completed later
this year," the minutes read.
"Some committee members had been asked by members of the public
whether, if tapering in the pace of purchases continues as
expected, the final reduction would come in a single $15 billion
per month reduction or in a $10 billion reduction followed by a $5
Expect that final cut to come in October if recovery continues
at its current pace.
"Participants generally agreed that if incoming information
continued to support its expectation of improvement in labor market
conditions and a return of inflation toward its longer-run
objective, it would be appropriate to complete asset purchases with
a $15 billion reduction in the pace of purchases in order to avoid
having the small, remaining level of purchases receive undue focus
among investors," the minutes read.
"If the economy progresses about as the Committee expects,
warranting reductions in the pace of purchases at each upcoming
meeting, this final reduction would occur following the October
Upon digesting The Fed's words, stocks rose on sentiments that
the Fed will also keep interest rates low for some time after it
concludes its bond-buying program.
The dollar was flat against the yen, with USD/JPY unchanged at
101.58, and down against the Swiss franc, with USD/CHF down 0.24%
The greenback was down against the pound, with GBP/USD up 0.15%
The dollar was down against its cousins in Canada, Australia and
New Zealand, with USD/CAD down 0.25% at 1.0651, AUD/USD up 0.19% at
0.9418 and NZD/USD up 0.41% at 0.8824.
The US Dollar Index, which tracks the performance of the
greenback versus a basket of six other major currencies, was down
0.22% at 80.05.
On Thursday, the U.S. is to release the weekly government report
on initial jobless claims.
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