FX Roundup: Dollar heads lower following Fed meeting

The dollar tumbled lower on Thursday following a non-committal policy statement from the US Federal Reserve overnight.

While the central bank’s Federal Open Market Committee kept the range for the Fed funds rate unchanged at between 0.25% and 0.50% at the conclusion of its meeting on Wednesday, it noted it was “loosely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook."

In response, the dollar slipped lower against a basket of major forex crosses. At 1622 GMT, the euro was up 0.50% against the greenback exchanging at $1.0947, while the pound rose 1.09% exchanging at $1.4389.

Meanwhile, the dollar fell 0.04% against the yen to JPY118.6300

Kit Juckes, head of forex at Societe Generale, said, “The FOMC acknowledged the threat posed to the outlook for US labour markets and inflation from global and financial developments, but nevertheless left the door ajar for a March rate hike.”

“This would have been a dovish policy statement if market pricing of the outlook for rates hadn't already moved significantly since the December FOMC meeting, but as it is, it will lead to heightened uncertainty about the March meeting and equity markets have judged it hawkish enough to sell-off sharply.”

Elsewhere, the US dollar also fell 0.16% against its Canadian counterpart exchanging at CAD$1.4073. Concurrently, the Australian dollar rose 0.97% against the greenback exchanging at US$0.7095 and the New Zealand dollar rose 0.65% exchanging at US$0.6474.

In Latin America, the dollar fell against major regional crosses, including the Colombian (down 0.63%), Mexican (down 1.05%) and Chilean (down 0.63%) pesos.