RTTNews - The U.S. dollar added to its gains versus other major currencies on Wednesday in New York as traders mulled over the Federal Reserve's interest rate decision and accompanying remarks.
The Federal Open Market Committee kept its key interest rate steady Wednesday, leaving it at a target range between 0 and 0.25 percent. The move was widely expected.
While the central bank noted some improvement in the economy, and removed its warning about the possibility of deflation, many economists believe the historically low rates could remain for some time, leaving worries that the massive stimulus efforts could lead to inflation down the road.
The economic outlook that accompanied the Fed's rate decision was almost identical to comments that came along with the last decision in April, signaling that economic activity, while moderating, will remain weak for some time.
The dollar rose to 1.3905 against the euro after the rate decision. Earlier, the greenback had hit a 13-day low of 1.4137 in overnight deals.
The European Central Bank allotted EUR 442 billion to banks for 12 months, the biggest amount it has ever given in a single auction. The amount was more than most economists had expected.
The buck climbed 1.6386 against the pound, erasing an early slide. Earlier, the U.S. currency reached a 13-day low of 1.6602.
Retail sales in the U.K. dropped for the second straight month in June after an increase in April, but the pace of decline was unchanged from May, results of the latest Distributive Trades Survey conducted by the Confederation of British Industry showed Wednesday. However, the drop was less sever than falls recorded between July 2008 and March 2009.
The greenback climed to 96.05 against the Japanese yen, moving to the high end of a recent traing range.
Earlier, a Commerce Department report said durable goods orders rose 1.8 percent in May, matching the revised increase seen in April. The continued increase came as a surprise to economists, who expected orders to fall 0.9 percent compared to the 1.9 percent increase originally reported for the previous month.
Later a Commerce Department report showed that new home sales edged down 0.6 percent to an annual rate of 342,000 in May from a revised April rate of 344,000. Economists had expected sales to jump 2.3 percent to 360,000 from the 352,000 originally reported for the previous month.
Also on Wednesday, the Organization for Economic Co-operation and Development Wednesday upgraded the economic outlook for its 30 member countries. The Paris-based group said the slowdown in these economies is reaching its bottom, but recovery is likely to be weak and fragile.
In addition, the OECD warned that the economic and social damage caused by the crisis would last for a long time.
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