WASHINGTON (dpa-AFX) - The U.S. dollar, which slipped in early New York session on Wednesday after data showed a smaller than expected increase in the nation's private sector job growth, rebounded after the Federal Reserve's comments suggested a rate cut in March is unlikely.
As widely expected, the Fed maintained the target range for the federal funds rate at 5.25 to 5.5% in support of its dual goals of maximum employment and inflation at the rate of 2% over the longer run.
The decision to leave rates unchanged came as the Fed acknowledged inflation has eased over the past year but said it remains elevated.
The central bank also described economic growth as solid while noting job gains have moderated since early last year but remain strong.
However, the Fed also said it does not expect it will be appropriate to lower rates until it has gained greater confidence that inflation is moving sustainably toward 2%.
In his post-meeting press conference, Fed Chair Jerome Powell said that he doesn't think it's likely the central bank will reach that level of confidence by the time of the March meeting.
Following the announcement, the chances of a 25 basis point rate cut in March have fallen to 35.5%, according to CME Group's FedWatch Tool.
The dollar fell earlier in the session after data from payroll processor ADP showed that private sector employment rose by 107,000 jobs in January after climbing by a downwardly revised 158,000 jobs in December.
Economists had expected private sector employment to increase by 145,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.
MNI Indicators released a report showing Chicago-area business activity unexpectedly contracted at an accelerated rate in the month of January. The report said the Chicago business barometer slipped to 46.0 in January from an upwardly revised 47.2 in December, with a reading below 50 indicating a contraction.
The dollar index, which dropped to 102.94 after the release of the private sector job growth data and the report on Chicago area business activity, rose to 103.74 after the central bank's policy announcement. The index was last seen at 103.55, up 0.14% from the previous close.
Against the Euro, the dollar firmed to 1.0815 from 1.0846. The dollar strengthened to 1.2683 against Pound Sterling from the previous close of 1.2701.
Against the Japanese currency, the dollar weakened to 147.00 yen after having firmed to 147.90 yen earlier in the day. The dollar gained against the Aussie, firming to 0.6566, rising more than 0.5% from Tuesday's close. Against the Loonie, the dollar strengthened to C$ 1.3437.
Copyright(c) 2024 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2024 AFX News
