The U.S. dollar declined by the steepest margin in 10 weeks versus the euro after the Federal Reserve signaled that it intends to maintain the low interest rates for some time and watered down its economic growth prospects.
The dollar fell 0.4 percent to close at 1.3600 per euro last week in New York, the biggest decline since April 11. The currency remained slightly unchanged at 102.07 yen, while the yen fell 0.1 percent to 138.82 against the euro.
“The Fed’s intention is to convince the market that policy will remain accommodative and liquidity abundant for a long, long time,” Robert Lynch, a New York-based currency strategist at HSBC Holdings Plc told Bloomberg. Such a situation works against the dollar rather than support it.
The dollar also lost out to analysts’ estimates that forecasts orders for pricey factory goods to have declined in May before official data is released on June 25.
The pound advanced 0.3 percent to close at $1.7013 on Friday after Bank of England Governor Mark Carney hinted that interest rates may be increased sooner than expected, something that was confirmed in the minutes of the central bank’s June meeting.
The Norwegian krona declined the most against the euro in 12 months after the central bank’s governor signaled that interest rates would be slashed for the first time since March 2012. The krona plunged 2.5 percent to trade at 8.3212, the steepest fall since June 2013.
The Canadian dollar was one of the biggest gainers last week, after inflation surpassed the Bank of Canada’s target. The Canadian dollar rose 0.9 percent to C$`.0758 versus the U.S. dollar after inflation exceeded the central bank’s 2 percent target for the first time since 2012. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com