Forex – U.S. Dollar Rises Even as Fed Takes Dovish Stance

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© Reuters.  © Reuters.

Investing.com – The greenback rallied on Thursday as it slowly recovered from an unexpected dovish stance from the Federal Reserve.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rallied 0.6% to 95.755 as of 10:38 AM ET (14:38 GMT).

The Fed left rates unchanged on Wednesday, but cut its outlook for U.S. economic growth over the next year due to concerns about a slowing economy, even amid a strong labor market.

Policymakers lowered their predictions of a rate increase in 2019, signaling that the Fed is unlikely to change its patient strategy anytime soon.

The central bank also indicated that it would end its policy of balance sheet reduction in the later half of the year.

Meanwhile, the number of people who filed new applications for unemployment assistance fell, indicating that conditions in the labor market remain aren’t weakening even as the number of new jobs fell in February.

The dollar rose against the safe-haven yen, with USD/JPY rising 0.05% to 111.46.

The pound was lower after the Bank of England kept rates unchanged, ignoring upbeat economic data out of caution over the U.K.’s plan to leave the European Union.

Prime Minister Theresa May is expected to ask Brussels for a Brexit deadline extension of three months later Thursday but it’s unclear if the bloc will grant her wish.

GBP/USD slipped 0.5% to 1.3126.

Elsewhere, AUD/USD was up 0.2% at 0.7125 while NZD/USD gained 0.1% to 0.6891. The loonie fell, with USD/CAD rising 0.4% to 1.3355 and EUR/USD inched down 0.3% to 1.1376.

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