Markets

USA dollar off day's highs, Treasury yields fall after Fed statement

USA dollar off day's highs, Treasury yields fall after Fed statement

The Fed made its announcement Wednesday, following a two-day meeting of its Federal Open Market Committee. The trade-weighted index fell to 73.12 from 73.25.

The yield on 10-year US Treasury notes slipped slightly to 2.96 per cent following the release of the statement, while the S&P 500 Index of US stocks climbed to its highest level of the day and the Bloomberg Dollar Spot Index fell.

The decision to maintain the federal funds target range at 1.5 per cent to 1.75 per cent was a unanimous 8-0.

Tradables CPI, which includes goods and services that compete with worldwide rivals, fell 0.1 percent in the first quarter and slipped 0.4 percent on the year, keeping headline inflation near the bottom of the bank's 1 percent-to-3 percent range.

The euro gained 0.1 per cent to US$1.1968.

The Fed's rate-setting committee downplayed a recent slowdown in economic and job growth, saying that activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.

In late NY trading, the euro rose to 1.2005 dollars from 1.1996 dollars in the previous session, and the British pound increased to 1.3624 dollars from 1.3618 USA dollars in the previous session.

Vineland's Jamil Demby taken in the sixth round of the National Football League draft
But after last season's unproductive performance, he agreed to rework the deal to what essentially is a one-year contract. The Los Angeles Rams will get to make up for lost time with eight picks on Day 3 of the National Football League draft.

"The risk at the moment is that the increasing uncertainty could create ambiguity in executives' heads, it makes corporate decision-making more hard and then (leads to) a decline in investment", Alastair George, chief investment strategist at Edison Investment Research, said.

Hong Kong's Hang Seng index ended 1.3 per cent lower, but Chinese shares bucked the trend.

The stability in rates this month will bring some respite to homebuyers who have been challenged by rising mortgage rates after the hike in overall interest rates by the Fed in March.

The Fed hinted that more rate hikes are coming later this year if the economy continues to strengthen. The Fed gradually is tightening credit to control inflation against the backdrop of a tight job market, a resilient economy and a pickup in consumer prices. The Federal Reserve noted inflation had moved up but said its two percent target was "symmetric", indicating there was margin to fluctuate above or below that level. The Fed had last increased rates in March.

The New Zealand dollar fell to its lowest level in more than four months as further signs of a robust U.S. jobs market stoked expectations that the Federal Reserve will raise interest rates again next month.

The dollar also scored a three-month peak on the yen at 110.05 overnight, before edging back to 109.63. Yields rise as bond prices fall.

Gold increased 0.2 per cent to US$1,306.92 an ounce.


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