Singapore - The dollar fell against most of its major peers as the prospect of slower interest-rate increases in the United States disappointed greenback bulls.
A gauge of the currency dropped to the lowest level in a month after the Federal Reserve cut its longer-term projections for US borrowing costs. The yen rose before the Bank of Japan decides policy on Friday. The euro strengthened as regional finance ministers prepared to meet to discuss Greece, which remains locked in a standoff with creditors.
“The Fed meeting was deemed a bit more dovish than expected, so the US dollar has taken a bit of a back seat,” said Stan Shamu, a Melbourne-based strategist at IG Ltd. “Ultimately, what’s clear is that the US is data-dependent.”
The dollar weakened 0.6 percent to 122.73 yen as of 9.30am in London and slid 0.6 percent to $1.1405 per euro, adding to a 0.8 percent loss on Wednesday.
Bloomberg’s Dollar Spot Index, which tracks the US currency against 10 peers, dropped 0.5 percent, its second day of declines.
The US currency remains the best performer in the past 12 months among currencies tracked by Bloomberg Correlation Weighted Indexes, gaining 17 percent. In June, though, it’s fallen 2.4 percent.
Fed officials maintained their forecasts for the benchmark interest rate to rise to 0.625 percent at the end of 2015, while lowering it for next year and the year after. The median estimate for the end of 2016 fell to 1.625 percent, from 1.875 percent in March.
The US central bank has kept its main rate at about zero since 2008.
Policy makers “really see only disadvantages to prematurely signaling lift-off”, Steven Englander, global head of Group-of-10 currency strategy at New York-based Citigroup, said in a client note. “There is no better time to kick the USD than when it is already down and writhing.”
With assistance from Kevin Buckland in Tokyo
Bloomberg