Investing.com - The dollar shot up against most major currencies on Wednesday after the Federal Reserve delivered an upbeat take on the U.S. economy and used a dovish timetable phrase in a new light, suggesting that rate hikes are on the way though monetary authorities won't rush to act
In U.S. trading on Wednesday, EUR/USD was down 1.25% at 1.2354.
The Federal Reserve said earlier it was leaving its benchmark interest rate unchanged at 0.00-0.25% and added it will exercise patience when raising interest rates to make sure the economy continues to improve.
In past statements, the Fed said it would take "considerable time" to make sure recovery is underway before tightening policy.
In Wednesday's statement, the Fed left in the dovish phrase, though the context of the language suggested that the "considerable time" wordage applied to past statements, leaving markets to conclude that rate hikes are on the way though monetary authorities will be patient when acting.
"Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said in its statement, referring to its monthly bond-buying stimulus programs it ended in October.
"However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated."
The dollar was up against the yen, with USD/JPY up 1.76% at 118.47, and up against the Swiss franc, with USD/CHF up 1.19% at 0.9713.
The greenback was up against the pound, with GBP/USD down 1.03% at 1.5587.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.15% at 1.1647, AUD/USD down 1.00% at 0.8138 and NZD/USD down 1.12% at 0.7714.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 1.27% at 89.18.
On Thursday, the U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.