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U.S. Dollar Sags after Fed’s Dovish Tack

The dollar was giving ground in Asia on Thursday as investors priced in a later start and a slower pace for future U.S rate rises, slashing bond yields globally and firing up stocks.  The formerly friendless euro found itself up at $1.0880 EUR=, having jumped 2.8 percent on Wednesday, while oil held gains of 5 percent as the dollar retreat benefited commodities.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 1.3 percent for its best daily performance in five weeks, while Australia’s main index .AXJO jumped 1.4 percent.  The only laggard was the Nikkei .N225 which slipped 1.1 percent in reaction to a rising yen.

Short-term U.S. yields had boasted their biggest drop in six years after the Federal Reserve trimmed forecasts for inflation and growth, and said unemployment could fall further than first thought without risking a spike in inflation.  The median projection for the Fed funds rate at the end of 2015 was cut to 0.625 percent, down half a point from December.

Reuters [1]

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