The dollar sank to its weakest level in three weeks on Thursday after a cautious message from the Federal Reserve stopped well short of the aggressive signal of prospective higher interest rates expected by some in the market.
In Europe, meetings of the Swiss and Norwegian central banks were the early focus. The euro traded at its highest level in 10 days against the dollar while sterling inched up to a new 5-year high of $1.7018 and the New Zealand dollar soared to a record high.
New projections suggested the Fed saw rates rising more in 2015 and 2016 than it had previously forecast, but officials lowered their long-term rate target. The Fed also sounded comfortable with the inflation outlook despite recent signs of a pick-up in price pressure.
Fed chief Janet Yellen said there had been “a slight decline of projections pertaining to longer-term growth” and officials lowered their view of the expected long-term federal funds rate from 4 percent to 3.75 percent. U.S. Treasury yields fell, with the benchmark 10-year rate dropping to 2.582 percent from the U.S. close of 2.615 percent.
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