By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar held modest gains versus rivals Wednesday, a day after the U.S. Federal Reserve offered no hints it’s likely to pursue further quantitative easing any time soon.
The ICE dollar index DXY +0.24% traded at 80.206, off slightly from 80.231 in late North American trading on Tuesday. The dollar index gained over the session on Tuesday, rising from 79.869 recorded late Monday.
The central bank’s rate-setting Federal Open Market Committee, or FOMC, on Tuesday reiterated that they expect rates to stay low until late 2014 and the Fed maintained its bond-purchase programs.
The index “has continued its run higher that started immediately after the FOMC statement yesterday. DXY rallied to a high of 80.43 and has now retraced more than half of the January-February losses,” said Adam Cole, global head of forex strategy at RBC Capital Markets.
Noting ongoing gains for the U.S. dollar, Credit Agricole strategists attributed the move to “a Fed statement that was less downbeat than in January, with no hint of any further quantitative easing.”
“In combination with a solid February retail-sales report and upward revisions to December and January, U.S. bond yields pushed higher,” they added.
The euro EURUSD -0.28% was flat versus the U.S. unit to trade at $1.3066, versus $1.3065 in late trading Tuesday, while the British pound GBPUSD -0.17% traded at $1.5705, up from $1.5693.
Solid gains by European equities and a well-received auction of Italian government bonds helped lift the shared currency as risk appetite increased across the board, said Geoffrey Yu, strategist at UBS.
Against the Japanese currency USDJPY +0.75% , the dollar on Tuesday touched its highest level since last April.
Gains continued for the dollar on Wednesday, with the dollar buying 83.60 yen, compared with ÂĄ83.03 in late Tuesday trading.
Yu said the Bank of Japan’s recent decision to further loosen monetary policy is serving to undercut the yen.
Looser BOJ policy “is, at last, weakening the yen. And with the [Swiss National Bank] successfully capping the Swiss franc, we see one safe-haven currency left: the U.S. dollar,” he said.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Sarah Turner is MarketWatch's bureau chief in Sydney.
