Dollar Declines as Fed Lowers Projections for Benchmark Rate

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The dollar declined to a one-week low after the Federal Reserve lowered its 2016 and 2017 projections for U.S. interest rates.

The U.S. currency slid even as the central bank policy makers raised their assessment of the economy and stayed on track to raise interest rates this year for the first time in almost a decade. The Fed’s median estimate for the end of 2016 fell to 1.625 percent, compared with 1.875 percent forecast in March for the so-called dots.

The Bloomberg Dollar Spot Index, which tracks the currency versus 10 major peers fell, 0.2 percent to 1,172.74 as of 2:27 p.m. in New York, reaching the strongest level since June 10.

The U.S. currency declined 0.3 percent to $1.1283 per euro. It gained 0.4 percent to 123.87 yen, after rising as much as 1.1 percent.

Officials kept the benchmark overnight fed funds rate in a zero to 0.25 percent range, where it has been since December 2008 to bolster the economy after the worst recession since the Great Depression.

Source: Bloomberg

Gold Trades Steady as Fed Raises Assessment of U.S. Economy

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Gold traded little changed after the Federal Reserve officials raised their assessment of the labor market and the economy.

The metal swung between year-to-date gains and losses more than 10 times in 2015, gyrating as traders tried to gauge the timing of U.S. interest-rate increases. Higher rates drive investors to favor assets that pay interest, including new bonds, curbing the appeal of gold, which generally offers returns only through price gains.

Gold for immediate delivery fell 0.1 percent to $1,181.37 an ounce at 2:04 p.m. in New York, according to Bloomberg generic pricing.

The central bank’s benchmark rate has been near zero percent, a record low, since 2008.

Source: Bloomberg

Japan Stocks Fall as BOJ Meets After Fed Signals Gradual Hikes

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Japanese stocks fell as investors await a Bank of Japan policy decision after the Federal Reserve signaled the pace of U.S. interest-rate increases will be slow even as it prepares to raise borrowing costs this year.

The Topix slipped 0.2 percent to 1,631.01 as of 9:01 a.m. in Tokyo. The Nikkei 225 Stock Average lost 0.2 percent to 20,180.46. The BOJ begins a two-day meeting Thursday in Tokyo, with all 35 economists surveyed by Bloomberg forecasting Governor Haruhiko Kuroda will keep policy on hold.

The Fed maintained its forecast for the benchmark rate to rise to 0.625 percent this year, while lowering its projection for 2016. Although officials bolstered their assessment of the labor market and economy, Chair Janet Yellen said they want to see more decisive evidence on growth, and that she anticipates only gradual increases in borrowing costs will be warranted.

Source : Bloomberg

U.S. Stocks Gain, Dollar Drops as Yellen Sees Gradual Rate Rise

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U.S. stocks rose, the dollar fell and Treasuries erased losses as the Federal Reserve signaled the pace of tighter monetary policy will be gradual even as the central bank prepares to lift interest rates this year.

The Standard & Poor’s 500 Index rose 0.2 percent at 4 p.m. in New York, erasing declines on the Fed’s statement. The Bloomberg Dollar Spot Index dropped 0.7 percent, reversing gains. The yield on 10-year Treasury notes was little changed at 2.32 percent after rising to 2.40 percent earlier. Gold jumped 0.5 percent, while oil fluctuated near $60 a barrel.

The Fed maintained its forecast that the benchmark interest rate would rise to 0.625 percent this year, and lowered its projection for next year. While officials lifted their assessment of the labor market and the economy, Chair Janet Yellen said policy makers want to see more decisive evidence on growth, and that she anticipates only gradual increases in borrowing costs will be warranted.

Officials held the benchmark overnight fed funds rate in a zero to 0.25 percent range, where it has been since December 2008, during the worst recession since the Great Depression. The decision was unanimous. The Fed also cut the top end of its projection for 2015 gross domestic product gains by 0.7 percentage point to 2 percent.

Source: Bloomberg

U.S. Stocks Fluctuate Before Fed While Treasuries Drop With Gold

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U.S. stocks fluctuated after erasing earlier gains, while Treasures slid with gold before the Federal Reserve’s decision on interest rates. European stocks fell amid signs the impasse in Greek aid talks was deepening.

The Standard & Poor’s 500 Index dropped 0.1 percent at 12:37 p.m. in New York, wiping out an earlier 0.4 percent advance. Treasuries fell, sending 10-year yields 6 basis points higher to 2.37 percent. The Stoxx Europe 600 Index lost 0.5 percent. Gold futures retreated 0.4 percent. Oil reversed gains after an inventory report.

Fed Chair Janet Yellen will conclude a two-day meeting of her board Wednesday amid speculation mixed U.S. economic data and Greece’s deadlocked debt negotiations will complicate the central bank’s drive to raise interest rates. Greece needs to seal a deal before the euro area’s bailout expires on June 30, or risk missing payments on its debt of about 313 billion euros ($352 billion).

The U.S. central bank meets as data continues to show uneven gains in the economy after a first-quarter slowdown. A report Tuesday indicated builders began work on fewer houses in May following a surge the prior month. That followed a disappointing factory report on Monday that pushed stocks lower.

Source: Bloomberg