FOREX-Dollar basks in Fed’s economic recovery views

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee

LONDON, Sept 17 (Reuters) – The U.S. dollar rebounded across
the board on Thursday, posting its biggest daily rise in more
than a week as the Fed’s decision to keep interest rates on hold
in the near future spurred a wave of unwinding of short
positions leading up to the outcome.

Some investors had bet the Fed might unveil more policy
easing, pushing the dollar lower low earlier this week.

But the Fed’s decision to keep its monetary policy settings
unchanged disappointed some investors who had bet on a more
dovish outcome, acccording to Charalambos Pissouros, a senior
market analyst at JFD Group.

At its policy meeting, the Fed pledged to keep rates near
zero until at least the end of 2023 when the labour market
reaches “maximum employment” and inflation is on track to
“moderately exceed” the 2% inflation target.

The Fed also expects economic growth to improve from the
coronavirus-induced drop they projected in June.

Against a basket of its rivals, the dollar index rose
about 0.32% to trade at 93.493. It fell to more than two-year
lows below 92 earlier this month.

Currencies which had gained ahead of the Fed’s decision
including the euro and the Australian dollar weakened the most.

The single currency briefly hit a one-month low in
Asian trading at $1.1737 before trimming some losses to stand
0.4% lower on the day.

Among Asian currencies, the Australian dollar was
the hardest hit, falling 0.4% at $0.72770 despite strong jobs
data.

The safe-haven Japanese yen changed hands at
105.08 against the greenback, a fraction below a 2-1/2-month
high of 104.81 marked overnight.

The pound was last at $1.2932, after dropping more
than 3.5% against the greenback and the euro last week before a
policy decision where the central bank is likely to signal that
it is getting ready to pump more stimulus into Britain’s
coronavirus-hit economy.
(Reporting by Saikat Chatterjee; Editing by William Maclean)

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