Dollar’s post Fed gains fizzle as long rate pause seen
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Having ridden a short-covering rally sharply higher after the Federal Reserve left interest rates on hold, the U.S. dollar erased virtually all of those gains on Thursday as markets digested the U.S. central bank’s policy statement.
The greenback rebounded across the board in late Asian trade, posting its biggest daily rise in more than a week as dealers unwound short positions taken ahead of the Fed decision.
But with the new guidance from the Fed focused on keeping U.S. interest rates at current record lows until employment and inflation reach its targets, some strategists argue any dollar strength is likely to be temporary.
At its policy meeting, the Fed pledged to keep rates near zero until at least the end of 2023 when the labour market reaches “maximum employment” and inflation is on track to “moderately exceed” the 2% target.
