(MENAFN– ecpulse)
The U.S. dollar surged against major counterparts after the Federal Reserve suggested an optimistic outlook about the U.S. economy and ended its bond-buying program.
The Federal Reserve said it will end its third round of quantitative easing, and also maintained its pledge to keep interest rates lower for a “considerable time.”
“The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability,” the central bank’s policy committee said in a statement following a two-day meeting.
The statement was less dovish than expected, and the U.S. dollar rallied correspondingly. The U.S. dollar was trading lower before the Fed decision, with market expectations pouring into the Fed stating risks from a global slowdown and risks of a stronger dollar.
The Federal Reserve notably dismissed recent volatility in the global financial market and slower growth in Europe and China as reasons to alter the progress of the U.S. economy and its march towards full employment.
Investors saw the statement as more optimistic about spending and the labor market.
The Euro (EURUSD) tumbled 0.7% to $1.2643 from $1.2734.
The U.S. dollar traded at 108.78 yen, up from 108.13 yen just before the decision, and up from 108.17 late Tuesday.
The Dollar Index, which measures the value of the U.S. dollar against six major currencies, was at 85.96, compared with 85.41 before the decision.
Treasuries fell, as did U.S. equities.
10-year Treasury note yields, which increase as prices fall, rose 7 basis points to 2.353%, and hit a high of 2.357%. Yields were at 2.325 before the Fed’s decision.
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