Investing.com - The dollar shot up against most major currencies
on Wednesday after the Federal Reserve cut its monthly bond-buying
program to $55 billion from $65 billion, while comments from Janet
Yellen suggesting a possible timetable as to when rates may rise
spooked markets and sent investors chasing safe-haven greenback
Fed bond purchases spur recovery by suppressing interest rates,
weakening the dollar in the process.
In U.S. trading on Wednesday, EUR/USD was down 0.75% at
The Fed earlier said it was leaving interest rates unchanged and
reduced the amount of bonds it buys in the open market each month
to $55 billion from $65 billion, both moves in line with
The news sent the greenback rising, as the Fed's
asset-purchasing program, which kicked off in 2012 at $85 billion a
month, has suppressed long-term interest rates for over a year,
sending investors to assets like stocks with the hope investing and
Elsewhere, the Fed omitted previous language calling for rate
hikes if the unemployment rate approaches a 6.5% threshold, a
policy tool known as forward guidance.
Even though the economy is improving, a highly accommodative
monetary policy stance remains appropriate, the U.S. central bank
The dollar shot up, however, after Fed Chair Janet Yellen
suggested at a press conference that interest rates could rise six
months after the bond-buying program ends, which sparked a selloff
in equities markets and fueled demand for the dollar.
The dollar was down against the yen, with USD/JPY up 1.08% at
102.53, and up against the Swiss franc, with USD/CHF up 0.86% at
The greenback was up against the pound, with GBP/USD down 0.30%
The dollar was up against its cousins in Canada, Australia and
New Zealand, with USD/CAD up 0.99% at 1.1246, AUD/USD down 0.92% at
0.9040 and NZD/USD down 0.73% at 0.8557.
The dollar index, which tracks the performance of the greenback
versus a basket of six other major currencies, was up 0.76% at
On Thursday, the U.S. is to publish the weekly report on initial
jobless claims, as well as data on existing home sales and
manufacturing activity in the Philadelphia region.
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