Dollar mixed after Fed

Central bank says the economy is weak but that the pace of decline appears to be slowing.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Ben Rooney, staff writer

Click the chart for current FX rates.
How has your economic outlook changed in the past 100 days?
  • It's better
  • It's worse
  • It's the same
10 countries, 10 solutions
A financial crisis has engulfed countries from the best-off to the worst-off around the world. The solutions to the problem are varied.

NEW YORK ( -- The dollar remained weak against the euro and the pound Wednesday after the Federal Reserve said the economy is still hurting but that the pace of the decline appears to be slowing.

The dollar was down 0.9% against the euro at $1.3273. It slid 1% versus the pound to $1.4777. Against the yen, the U.S. currency gained 1.3% to ¥97.67.

In a widely expected move, the U.S. central bank held its benchmark interest rate near zero and said "economic activity is likely to remain weak for a time." But the Fed also stated that the pace of the economic decline "appears to be somewhat slower."

The Fed said in a statement that it will continue to buy Treasurys and mortgage-backed securities but did not signal any new methods to boost the economy.

"The message is no change," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto. "They didn't indicate any monetary policy changes or modification to their asset purchase plans, but they did acknowledge some positive signs in the economy."

The announcement came after the government said the economy declined at a sharper-than-expected rate in the first quarter.

Gross domestic product, the broadest measure of economic activity, fell at an annual rate of 6.1% in the first quarter of 2009 after a 6.3% drop in the last three months of 2008.

While the decline was worse than the 4.7% drop that economists had forecast, it also contained some signs the economy is stabilizing.

The decline was driven in part by plummeting business inventories, which could mean the correction cycle is ending.

Additionally, the report showed that individual purchases rose 2.2% in the first quarter. It was the first time consumer spending, which makes up the bulk of economic activity, had increased since the second quarter of 2008.

"If spending is picking up, the stabilization story can still play out as long as we do not have another big shock in the financial sector," said Kathy Lien, director of currency research at Global Forex Trading.

That cautious sense of optimism about the economy gave a boost to higher-yielding currencies, such as the euro and the pound, and undercut demand for the dollar as a safe-haven. To top of page

Track 17 major currencies

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.