By Tom Westbrook
SINGAPORE (Reuters) - The dollar stood tall on Thursday after the U.S. Federal Reserve cut rates by 25 basis points, as expected, but its chairman signaled a higher bar for future rate cuts.
The greenback touched a seven-week high of 108.47 against the Japanese yen and stood just below that in Asian morning trade. It also rose on the Swiss franc , hitting a three-month high, and climbed against other major currencies.
The New Zealand dollar briefly jumped 0.2% after June-quarter gross domestic product landed higher than expectations, before being swamped by a rising greenback. The Aussie fell ahead of jobs data due at 0130 GMT.
The U.S. central bank, on a 7-3 vote, lowered the Fed funds target rate on Wednesday to a range of 1.75% to 2.00% "in light of the implications of global developments for the economic outlook."
However, Fed Chairman Jerome Powell described U.S. prospects as "favourable" and the rate move as "insurance." He did not rule out future cuts, but his remarks were not as dovish as markets had hoped for which lifted bond yields and the dollar.
Projections published by the Fed showed policymakers, at the median, expected rates to stay within the new range through 2020, while futures markets have priced in at least another cut.
"In the short term, this hawkish cut should still see the dollar well-bid, given that the path of interest rates outlined by the Fed is not close to that priced into the markets," said John Veils, Americas FX and macro strategist at BNY Mellon.
"The USD is still the highest-yielding currency in the G10 world, a sign that it is also the least unattractive house in an increasingly blighted neighborhood."
The dollar rose 0.3% on the euro (EUR=) after the Fed decision and steadied at $1.1027 on Thursday. It gave up some gains on the pound to hold around $1.2468.
Its strength on the yen may also reduce pressure for further easing from the Bank of Japan, which meets later on Thursday and is widely expected to keep rates on hold.
The New Zealand dollar popped to $0.6332 when quarterly growth came in a fraction higher than forecasts, though with year-on-year expansion at its slowest since 2013 the beat has done little to shift expectations of future monetary easing there.
The Australian dollar dropped to $0.6811 ahead of jobs data that is likely to provide a read on the interest rate outlook.
The Reserve Bank of Australia has indicated that it could ease again unless employment grows.
"An uptick in the unemployment rate likely to push up expectations for an October RBA cut," ANZ analysts said in a note. "Risks (are) to the downside," they added