Dollar rises as Fed signals it is in no rush to cut rates
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NEW YORK :The dollar rose broadly on Thursday, a day after the Federal Reserve indicated it was in no rush to cut rates further this year due to uncertainties around U.S. tariffs.
The Swiss franc weakened after the Swiss National Bank lowered its policy rate to 0.25 per cent, while the Swedish crown was soft after its central bank maintained its interest rate.
The euro was 0.7 per cent lower against the dollar at $1.0828 after U.S. policymakers, on Wednesday, held interest rates steady and signal led two quarter-point interest rate cuts for later this year, the same median forecast as three months ago.
"We're not going to be in any hurry to move," Fed Chair Jerome Powell said.
Powell's comments and the Fed statement underscored the challenge faced by policymakers as they navigate President Donald Trump's plans to levy duties on imports from U.S. trading partners and the impact on the economy.
Data on Thursday showed the number of Americans filing new applications for unemployment benefits increased slightly last week, suggesting the labor market remained stable in March.
Recent U.S. data have helped temper worries over slowing U.S. growth, that prompted the dollar to sag as much as 7 per cent against the euro since mid-January, Jayati Bharadwaj, a global FX strategist at TD Securities said.
"A lot of the bad news was already priced in, but none of the hard data is collapsing the way markets were fearing it would, and even the Fed is not indicating to you that they're in a hurry to ease rates again," she said.
"All of that is leading markets to reassess some of the bearishness that they have been pricing into the dollar," Bharadwaj, who expects the dollar to strengthen in the near term, said.
Traders are pricing in 63 basis points of Fed easing this year, LSEG data showed.
EUROPE'S CENTRAL BANK BONANZA
The dollar's broad strength weighed on the pound though the British currency pared some losses briefly after the Bank of England held interest rates at 4.5 per cent and warned against assumptions that they would be cut over its next few meetings as it grappled with deep uncertainty hanging over the British and world economies.
With UK inflation stuck firmly above its 2 per cent target, the BoE has cut borrowing costs by less than the European Central Bank and the Fed since last summer, contributing to the country's sluggish growth rate.
Sterling had earlier risen to a more than four-month high of $1.3015 in early Asian hours before retreating to trade down 0.3 per cent on the day at $1.2964.
In a busy day for central banks, the Swiss franc fell 0.7 per cent against the dollar after the Swiss National Bank cut its main interest rate to just above zero and flagged increased uncertainty over the global impact of U.S. President Donald Trump's trade policies.
Sweden's central bank meanwhile kept its policy rate at 2.25 per cent, as expected, pushing the krona 0.7 per cent lower against the dollar.
The yen was a shade weaker at 148.85 per dollar, a day after the Bank of Japan held rates and warned of heightening global economic uncertainty, suggesting the timing of further hikes will depend on the fallout from U.S. tariffs.
The Australian dollar was 1.1 per cent lower at $0.62875 after Australian employment unexpectedly fell in February, ending a strong run of impressive gains, as the red-hot labor market loosened a little, although the jobless rate remained steady.
The New Zealand dollar dropped 1.4 per cent to $0.5736 even as data showed the economy crawled out of a recession and grew at a faster-than-expected pace of 0.7 per cent last quarter, although underlying details were soft.
Bitcoin, the world's largest cryptocurrency by market cap, was up about 1 per cent on the day at $86,193, a near two-week high.
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