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Dollar off Lows as Fed Holds Rates Steady

ForexJun 10, 2020 05:20PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com - The dollar moved off session lows on Wednesday, but remained pressured after the Federal Reserve left interest rates unchanged and signaled it was no rush to raise rates.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell 0.36%, to 96.05, above session lows of 95.61.

The Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25% and signaled rates would remain in the lower zero bound through 2022.

"The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the Fed said.

The bank also pledged to continue its bond purchases, which has seen its balance sheet expand to over $7 trillion from about $4 trillion in just under three months. 

 
'The Federal Reserve remains extremely cautious about the pace of the rebound. Members of the FOMC remain more concerned about downside risks, including disinflation, more than upside risks. And, Congress needs to step up," Grant Thornton's Diane Swonk said.
 
The central bank's commitment to keeping rates lower for longer will likely keep the dollar on the backfoot, experts warn. “The Fed put is bigger than ever,” said Paresh Upadhyaya, a portfolio manager at Amundi Pioneer Asset Management, according to Reuters. "This is ultimately negative for the dollar and positive for risky assets." 

EUR/USD and GBP/USD, both of which continue to follow risk assets higher, traded flat against the greenback.  

 

Dollar off Lows as Fed Holds Rates Steady
 

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