Swiss National Bank takes more measures against strong franc
By Deborah Levine and Virginia Harrison, MarketWatch
NEW YORK(MarketWatch) — The dollar extended losses against many major currencies Wednesday, a day after the Federal Reserve pledged to keep interest rates on hold for at least two years.
Tuesday’s announcement on the path of monetary policy boosted U.S. stocks and contributed to a rebound in Asian and European markets. Commodities also rose.
The U.S. dollar index DXY +0.59% , which measures the greenback’s performance against a basket of six currencies, slipped to 74.035, from 74.307 in North American trade late Tuesday.
The euro EURUSD -0.99% rose to $1.4344, from $1.4274 Tuesday.
Against the Japanese yen, the greenback USDJPY -0.71% bought 76.40 yen, from ¥76.86 late Tuesday. However, the yen tends to be closely correlated to movements in short-term Treasury yields, which plunged to new record lows after the Fed’s decision. That makes dollar-denominated bonds less attractive to Japanese investors.
“On the margins, further accommodative monetary policy is likely positive for equities and commodities and emerging markets,” said currency strategists at Brown Brothers Harriman. ”From a [foreign-exchange] perspective, further accommodative policy from the Fed is clearly expected to be a medium-term drag on the dollar, but with fears still lingering over the recent equity capitulation, the dollar is likely dictated by gyrations in market sentiment.”
Major Asian and European equity markets rose Wednesday, though U.S. stock futures pointed to a lower opening on Wall Street. Read about Asian stocks. See more on London equities. Read story on U.S. stock futures.
After the Fed released its statement late Tuesday, the dollar extended losses, especially against the safe-haven beneficiaries — the yen and Swiss franc — as officials’ assessment of the economy and need for such a long period of low rates dimmed many investors’ hopes for a U.S. recovery. Read about dollar’s decline Tuesday, Fed statement.
Swiss franc, U.K. pound
However, movements in some currency pairs were dictated more by data and announcements from individual countries. The dollar gained on the Swiss franc after the Swiss National Bank said it will take additional measures against the strength of the franc. Read about Swiss franc.
The dollar USDCHF +0.61% fell to 72.47 centimes, compared with 71.58 centimes late Tuesday. There are 100 centimes in a franc.
The British pound extended losses slightly after the Bank of England trimmed its forecast for both growth and inflation. Sterling GBPUSD -0.73% fell 0.3% to $1.6254.
