The greenback rose against European currencies on Wednesday as the Fed left interest rates unchanged as expected but removed the warning that inflation could be undesirably low. Investors interpret the statement as a hint that the Fed rate may increase in the fourth quarter. In addition, the Fed also repeated that they will keep an eye on the market to evaluate the timing and size of purchases of securities. Earlier in the day, U.S. durable goods came out at 1.8%, better than forecast -0.8%, also support dollar.
Euro rose initially to 1.4139 in European morning session b4 retreating, price declined 1.24% to as low as 1.3888 after the ECB's 1-year tender showed that the central bank will lend 442 billion euros in its first 1-year refinancing operation. This figure was above the median forecast of around 300 billion euros. Euro fell to 132.98 yen in late New York trading but rallied against the Swiss Franc on rumours that the SNB was selling the Swiss franc again and the Swiss Franc staged a rally to as high as 1.1026.
The British pound after rallying to 1.6605 in London morning, tumbled later to as low as 1.6369 after Bank of England's King said weaker exchange rate may help U.K. recover faster than other economies. King did not think lending would recover much until bank balance sheets go healthier. GBPJPY also fell 1.2% to 156.17.
U.S. treasury debt prices declined with the 30-year bond down over a point in disappointment that the Fed Reserve did not extend programs for buying longer-dated treasuries and mortgage-backed securities. The Fed said in March it would buy $300 billion of longer-dated Treasuries over six months in an effort to free up lending and lower longer-term rates like those on mortgage.
Economic data to be released on Thursday include : Current account in New Zealand; Industrial orders in Eurozone; GDP, personal consumption, PCE and Jobless claims.