Dollar slips from 4-mth high, awaits fresh catalysts after Fed


Commodity-linked currencies like the Canadian and Australian dollars gained sharply, with the latter rising 0.4 percent to $0.7523 cents after data showing a better-than-expected jump in the country's trade surplus for March.

On Monday the government reported that inflation as measured by the Fed's preferred PCE price index rose to a 12-month rate of 2% for the first time in a year.

In Europe, earnings disappointments from medical technology company Smith & Nephew and postal services provider Bpost soured the mood as the stocks fell 5.9 per cent and 10.9 per cent respectively, while German drug and crop chemicals maker Bayer flagged a stronger euro in its update. The S&P 500 declined 0.2%, and the Nasdaq Composite added 0.1%.

In late NY trading, the euro rose to 1.2005 dollars from 1.1996 dollars in the previous session, and the British pound increased to 1.3624 dollars from 1.3618 US dollars in the previous session.

A unanimous vote The decision to maintain the interest rate at 1.5-1.75 per cent was a unanimous 8-0.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent, while South Korean stocks stumbled 0.7 per cent.

Germany's DAX Index surged 1.5 percent to the highest in nearly three months. The blue chip CSI 300 was up 0.8 per cent, but not far from an eight-month low hit in April.

Despite signs of steady economic growth and resurgent inflation, the Fed's monetary policy committee left the benchmark interest rate unchanged in a target range of 1.5 to 1.75%, after a hike at the previous meeting in March. Traders who were looking for the Fed to issue hawkish commentary got more than they had hoped for in the central bank's monetary statement.

Officials may have signaled their willingness to allow inflation to exceed their 2 percent goal somewhat by adding a reference to the "symmetric" nature of their target.

Consumer prices rose 2% in March from a year earlier, according to the Fed, after a year in which inflation softened. Investors overwhelmingly expect a rate hike at the June 12-13 policy meeting.

"The market is also probably pretty long (dollar/yen) now", Horchani said, adding that the dollar could face some downside risk against the yen, if USA equities come under pressure on Thursday.

The dollar also scored a three-month peak on the yen at 110.05 overnight, before edging back to 109.63.

On Wednesday, the dollar's index against a basket of six major currencies had briefly slipped to around 92.245 after the Fed's policy statement but later regained its footing to set a four-month high of 92.834 - marking a 4 percent gain from a trough touched in mid-April.

Spot gold was up 0.7 percent at $1,312.14 per ounce by 2:33 p.m. EDT (1833 GMT), while US gold futures for June delivery settled down $1.20, or 0.1 percent, at $1,305.60.