Credit: Investing.com -
Investing.com - The greenback moved off earlier lows and traded mixed against most major currencies on Wednesday after the Federal Reserve said it was cutting USD10 billion from its USD75 billion monthly bond-buying program.
In U.S. trading on Wednesday, EUR/USD was down 0.10% at 1.3657.
The Federal Reserve on Wednesday left its benchmark lending target, the fed funds rate, unchanged at 0.00%-0.25% and trimmed USD10 billion from its USD75 billion monthly asset-purchasing program in place to spur recovery.
The Fed is now purchasing USD65 billion in Treasury holdings and mortgage debt a month to help make broader financial conditions more accommodative in order to strengthen recovery.
Economic activity is picking up, the labor market is making some improvement, while recent congressional inability to agree on spending packages is still dragging on recovery albeit less nowadays due to recent compromises.
Such a scenario prompted monetary authorities to taper the Fed's monthly bond purchases, which aim to push down long-term interest rates to boost the economy, thus weakening the dollar as long as they remain in effect.
The news, which was widely expected, brought the dollar off earlier lows on prospects that the Federal Reserve will continue to taper its stimulus program as long as the economy improves.
The yen served as the safe-haven asset class of choice on Wednesday as turbulence began to rebuild in emerging markets.
Turkey and South Africa hiked interest rates earlier to support their currencies, which rekindled fears that an end to ultra-loose monetary policies in the U.S. and elsewhere will makes assets in emerging markets less attractive, which sent stocks falling.
The dollar was down against the yen, with USD/JPY down 0.80% at 102.11, and down against the Swiss franc, with USD/CHF down 0.30% at 0.8946.
The greenback was up against the pound, with GBP/USD down 0.10% at 1.6564.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.04% at 1.1158, AUD/USD down 0.46% at 0.8738 and NZD/USD down 0.85% at 0.8188.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.04% at 80.61.
On Thursday, the U.S. is to publish preliminary data on fourth-quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
