Dollar Gains As Fed Signals No Additional Easing
The dollar was slightly stronger on Wednesday, after the Federal Reserve gave no indication it will embark on a third round of quantitative easing in support of the sputtering economy.
On the flip side, minutes from the Bank of England’s latest meeting suggested U.K. policy makers are pondering further asset purchases, driving the dollar to a new monthly high versus the sterling.
The buck found support as the Fed kept its benchmark interest rate at a record low near one percent, while suggesting the economy will pick up in the second half the year.
Still, with consumers pinched by rising prices and the jobs market still weak, the Federal admitted that earlier projections of U.S. economic growth were overly optimistic.
The Fed downwardly revised its 2011 outlook to between 2.7 percent and 2.9 percent annual growth. The unemployment rate will still be around 8.6 percent to 8.9 percent at year’s end, according to the Fed.
The dollar rose to $1.6073 versus the sterling, its highest since May 23. The buck stabilized versus the euro after losing ground earlier in the week, rising to $1.4370 from $1.4440.
An afternoon rally took the dollar to a weekly high of Y80.35 against the yen.
Bank of England’s policy makers retained interest rates at a record low of 0.5 percent in June, again by a split vote, the minutes of the meeting showed Wednesday.
But certain members hinted at further quantitative easing, citing downside risks to medium-term inflation.
Meanwhile, new orders received by Eurozone industrial sector increased in April, but the rebound from March’s decline was weaker than expected, latest figures from Eurostat showed Wednesday.
Orders grew 0.7 percent month-on-month in April, after falling 1.5 percent in March.
