TOKYO- The dollar edged up against major currencies on Thursday following the US Federal Reserve’s upbeat assessment of the economic recovery and as its increased tolerance for higher inflation push bond yields higher.
At its policy meeting, the Fed pledged to keep rates near zero until the labor market reaches “maximum employment” and inflation is on track to “moderately exceed” the 2 percent inflation target.
The Fed also expects economic growth to improve from the coronavirus-induced drop they projected in June.
The dollar index rose 0.2 percent against six major currencies to trade at 93.389, while changing hands at 1.1777 against the euro.
The greenback initially fell after the Fed’s announcement, and weaker-than-expected US retail sales data, but swung into postive territory after Chair Jerome Powell’s comment on economic outlook.
“The dollar shifted a little, but the market overall did not show a huge reaction,” said Shinichiro Kadota, senior strategist at Baraclays.
“Besides the presidential election, I think the focus will be on the US fiscal support, which (Fed Chair Jerome) Powell also said is essential. The Congress is still struggling with stimulus talks, and markets are eyeing if that would be resolved.”
The safe-haven Japanese yen changed hands at 105.035 against the greenback, a fraction below a 2 1/2-month high of 104.81 marked overnight.