Dollar basks in Fed's economic recovery views  09/17/2020 06:11:34 

LONDON (Reuters) - The U.S. dollar rebounded across the board on Thursday, posting its biggest daily rise in more than a week as the Feds decision to keep interest rates on hold in the near future spurred a wave of unwinding of short positions leading up to the outcome.

FILE PHOTO: U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

Some investors had bet the Fed might unveil more policy easing, pushing the dollar lower low earlier this week.

But the Feds decision to keep its monetary policy settings unchanged disappointed some investors who had bet on a more dovish outcome, acccording to Charalambos Pissouros, a senior market analyst at JFD Group.

At its policy meeting, the Fed pledged to keep rates near zero until at least the end of 2023 when the labour market reaches maximum employment and inflation is on track to moderately exceed the 2% inflation target.

The Fed also expects economic growth to improve from the coronavirus-induced drop they projected in June.

Against a basket of its rivals, the dollar index =USD rose about 0.32% to trade at 93.493. It fell to more than two-year lows below 92 earlier this month.

Currencies which had gained ahead of the Feds decision including the euro and the Australian dollar weakened the most.

The single currency EUR=EBS briefly hit a one-month low in Asian trading at $1.1737 before trimming some losses to stand 0.4% lower on the day.

Among Asian currencies, the Australian dollar AUD=D3 was the hardest hit, falling 0.4% at $0.72770 despite strong jobs data.

The safe-haven Japanese yen JPY=EBS changed hands at 105.08 against the greenback, a fraction below a 2-1/2-month high of 104.81 marked overnight.

The pound was last at $1.2932 GBP=D3, after dropping more than 3.5% against the greenback and the euro last week before a policy decision where the central bank is likely to signal that it is getting ready to pump more stimulus into Britain's coronavirus-hit economy.

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