US dollar continues slide after dovish Fed meeting

[NEW YORK] The US dollar continued to sink on Thursday after the Federal Reserve surprised markets with a dovish rate stance.

The greenback slid 0.9 per cent against the euro, adding to Wednesday's 1.0 per cent loss after the Fed halved its projections for interest rate increases this year, citing the slower global economy and turmoil in markets.

Analysts had expected the Fed to be more bullish at the end of its policy meeting.

At 2100 GMT the dollar was at US$1.1317 per euro, and had also lost 1.2 per cent at 111.44 yen.

The British pound, bolstered by an austere budget proposal with 3.5 billion pounds (S$6.84 billion) in spending cuts, added 1.6 per cent at US$1.4479 after the Bank of England held its key interest rate unchanged, faced with a weak growth outlook at home and abroad.

"Given the Fed's adjusted forward guidance signals an even more gradual path higher in US interest rates than previously anticipated we expect that the US dollar could continue to consolidate lower in the near term," said Eric Viloria of Wells Fargo Securities.

"Meanwhile, we see an eventual resumption of US dollar strength over time as the Fed moves closer to resuming policy tightening."

AFP