FX round-up: Cable moving back towards post-referendum highs after FOMC

The US dollar fell back sharply in the wake of the Federal Reserve's policy announcement, despite what some observers described as a more hawkish bias in the macroeconomic projections that the central bank published alongside chair Jerome Powell's press briefing.

In a whip-saw session in US Treasury debt markets, the yield on the benchmark 10-year US Treasury note first rose as high as 2.94% during Powell's Question and Answer session with reporters and then fell back to trade at 2.88% as of 2020 GMT, down by one basis point.

Traders in the FX pits on the other hand did not seem to hesitate to send the Greenback lower from the 'get-go', with the US dollar spot index dropping 0.79% to 89.655.

Sterling, which was already higher on the day, extended its advance to trade up by 1.05% to 1.41455 ahead of the Monetary Policy Committee's decision the next day, with the pre-Brexit vote highs coming into sharper focus.

Against the euro, Sterling was still far from its pre-referendum levels, but it was near the top of its trading range from over the past six months, up by 0.24% to 1.1461.

To take note, traders were also waiting on the results of the EU heads of state summit on 22-23 March.

Euro/dollar also popped higher, adding 0.83% to 1.23433, while against the yen the dollar was off by 0.55% to 105.953.

Back in North America, the dollar was retreating by 1.76% to 18.4377 Mexican pesos and by 1.29% to 1.2903 against the Loonie, amid reports of apparent progress in talks to renegotiate NAFTA.

Further afield, the dollar was also on the back foot against Peru's sol, unfazed by reports that the South America nation's Pedro Pablo Kuczynski had stepped down amid a corruption probe.