Investing.com – The dollar was largely unchanged Thursday near multi-week lows after the U.S. Federal Reserve maintained its very dovish monetary policy, boosting confidence in the global economic recovery.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was flat at 90.610, trading not far away from a nine-week low.
EUR/USD traded down 0.1% at 1.2119, after earlier hitting its highest level against the dollar since late February, GBP/USD rose 0.2% to 1.3962, USD/JPY rose 0.2% to 108.78. The risk-sensitive AUD/USD rose 0.1% to 0.7794 and NZD/USD climbed 0.1% to 0.7258.
The Federal Reserve decided on Wednesday to leave the policy interest rate near zero and kept a $120 billion monthly pace of asset purchases, while acknowledging that there had been an improvement in the economic conditions.
In the press conference that followed the policy statement, Fed chairman Jerome Powell continued to signal that policy will remain steady for some time, to the benefit of the global economy, with inflation risks distorted by the pandemic-related decline in prices last year.
“The inflation rate will increase markedly above 2% but the Fed considers it transitory due to bottlenecks and base-effects. The only true inflation stems from the labor market (according to the Fed), why the labor market is now the one to watch,” said analysts at Nordea, in a note.
That said, the Commerce Department will publish its snapshot of first-quarter GDP growth on Thursday at 8:30 AM ET (1330 GMT). The economy is expected to have grown at a 6.1% annualized rate in the first three months of the year, which would be the second-fastest GDP growth pace since the third quarter of 2003 and would follow a 4.3% rate in the fourth quarter.
And that’s before the impact of the $1.8 trillion package for families and education that President Joe Biden unveiled Wednesday in his first joint speech to Congress.
Elsewhere, USD/TRY edged higher to 8.1972, ahead of the first public policy presentation by Turkey’s new central bank Governor Sahap Kavcioglu.
Kavcioglu is expected to raise inflation forecasts as the recent slide in the lira, following the abrupt sacking of his predecessor, exposed the limited room to deliver the interest-rate cuts sought by President Recep Tayyip Erdogan.
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