US Dollar falls as Fed keeps rate unchanged, says recovery intact despite delta surge

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US Dollar falls as Fed keeps rate unchanged, says recovery intact despite delta surge

Following conclusion of a two-day policy meet, the US Federal Reserve said in a statement late on Wednesday that the world's No 1 economy's recovery from the pandemic’s fiscal fallouts stayed well en-route despite an uptick in delta variants across the country, while the US Central Bank had also signalled a plausible tapering of fiscal supports for the economy, eventually sending the US Dollar Index (DXY) down as much as 0.41 per cent to 91.84 on Thursday's late-afternoon US trading.

Nonetheless, the US Federal Reserve did not provide any clues when it might begin to taper its $120 billion monthly bond repurchase program and kept its benchmark borrowing cost unchanged at 0.25 per cent. Meanwhile, flagging talks about the withdrawal of monetary supports, the US Central Bank had said in a statement after the two-day long meet of 18 policymakers, “With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen”.

However, speaking in a press conference following July Fed policy meet, US Federal Reserve Chair Powell was quoted saying that talks over rate hikes still might be miles away, adding to hindrances further for the American currency.

Apart from that, despite a near-quadrupling of daily pandemic cases in the US since Federal Reserve’s last policy meet, the Central Bank had sent a strong signal saying it had faith that an acceleration in vaccination campaign drive would "reduce the effect of the public health crisis on the economy" while enabling a buoyant reopening to continue.

In a unanimous statement, the Fed Policymakers had also told that they would be pushing for a taper-talk about when the Central Bank would reduce its $120 billion monthly bond buyback program. The US Dollar Index (DXY) faltered shortly after the Fed statement by 0.12 per cent to 92.31.

US Dollar pummels after Fed meet

Citing statistics, on Thursday's late-afternoon US trading hour, the US Dollar Index (DXY) measured against a basket of six major currencies tumbled 0.42 per cent to 91.84, while gold rises as much as 1.29 per cent to $1,830.15 an ounce.

Risk-sensitive Aussies gained 0.4 per cent while kiwis soared just a notch shy of 1.0 per cent. Besides, the bloc's common currency euro, shared among 19 eurozone member states, added 0.38 per cent to $1.1888, while the British Pound climbed 0.48 per cent to $1.3968 against its American counterpart.

Apart from that, safe-haven Japanese Yen rose 0.38 per cent to 109.49 yen per Dollar, while Swiss Franc jumped 0.47 per cent to $0.9057 against its American peer.