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Forex - Dollar index hits 2-1/2 month lows after Fed meeting

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Investing.com - The dollar dropped to two-and-a-half month lows against other major currencies on Thursday, after the Federal Reserve gave a less optimistic view of the economy than expected and as investors awaited the release of U.S. economic reports later in the day.

EUR/USD gained 0.44% to 1.0815, the highest since December 8.

In a widely expected move, the Fed left interest rates unchanged at the end of its two-day policy meeting on Wednesday.

The greenback weakened as optimism over the strength of the U.S. economy waned after policymakers said that some market-based measures of inflation were still low.

However, the Fed also said that job creations remained solid, inflation had increased and economic confidence was rising.

Elsewhere, GBP/USD rose 0.24% to trade at 1.2691, the highest level since December 14.

Earlier Thursday, market research firm Markit and the Chartered Institute of Purchasing & Supply said their U.K. construction purchasing managers' index dropped to 52.2 last month from December's reading of 54.2.

Economists had expected the index to slip to 53.8 in January.

But sterling remained supported as investors awaited the Bank of England's quarterly inflation report and interest rate decision later in the day.

Analysts believe the bank will raise its near-term growth and inflation forecasts after figures last week showed that the economy grew by 0.6% in the fourth quarter.

USD/JPY declined 0.54% to 112.40, not far from Tuesday's two-month lows of 112.04, while USD/CHF dropped 0.55% to trade at 0.9878.

The Australian and New Zealand dollars were stronger, with AUD/USD up 1.08% at a nearly three-month high of 0.7671 and with NZD/USD climbing 0.40% to 0.7308.

The Aussie was bossted after data earlier showed that Australia's trade surplus widened to A$3.511 billion in December from a revised A$2.040 billion in November. Analysts had expected the trade surplus to hit A$2.200 billion in December.

A separate report showed that Australia's building approvals declined by 1.2% in December, compared to expectations for a 2.0% drop.

Meanwhile, USD/CAD declined 0.48% to trade at 1.2987, re-approaching Tuesday's four-month trough of 1.2967.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.44% at 99.25, the lowest level since November 14.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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