RTTNews - The dollar swung wildly on Wednesday, reversing early losses after the Federal Reserve held steady on interests rates. Meanwhile, the Fed said it would extend to the end of October a program to buy longer-term government securities.
The Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.
The dollar touched a two-week high of 1.4085 versus the euro before slipping badly in mid-morning dealing. However, after the Fed's interest rate call, the dollar bounced back to 1.4130. A week ago, the dollar hit an 8-month low of 1.4446, but has since stabilized.
It was a similar pattern for the dollar versus the sterling. Volatile trading left the dollar near a 2-week high of 1.6389, set overnight. A brutal summer stretch saw the dollar drop to a 10-month low of 1.7012 earlier in August.
The buck saw a modest downtrend versus the yen come to end Wednesday, bouncing above 96 from an early low near 95.10.
The dollar suffered big losses versus the loonie in early dealing, paring some of this week's gains. The dollar fell from a near-term high above C$1.1000, dropping toward C$1.0850 before finding its footing after the rate call.
Housing data was overshadowed by the Fed. Existing home sales showed healthy gains for the second quarter of 2009, as sales rose 3.8 percent to a seasonally adjusted rate of 4.76 million units, according to data released Wednesday by the National Association of Realtors.
While the Commerce Department released a report on Wednesday showing that the U.S. trade deficit widened in the month of June compared to the previous month, the deficit for the month still came in narrower than economists had been anticipating.
With imports increasing at a faster pace than exports, the report showed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May.
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