Dollar lower against euro, yen after Fed rate statement

18/06/2015 12:24 AST

The dollar was lower against the euro and the yen on Thursday after the Federal Reserve tempered expectations for a rate hike saying that markets should not focus on the timing of an initial interest rate increase.

USD/JPY was down 0.30% to 123.06, off Wednesday’s one-week highs of 124.43.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at five-week lows of 94.4.

The dollar weakened across the board on Wednesday after the Fed lowered both its U.S. growth forecast and its interest-rate projections, prompting investors to push back expectations on the timing of an initial rate hike.

Fed Chair Janet Yellen said the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter.

EUR/USD was steady at one week highs of 1.1346 after ending Wednesday’s session up 0.79%.

Sentiment on the euro remained fragile as a deadlock between Greece and its international lenders continued ahead of the approaching deadline for Greece’s repayments to the International Monetary Fund.

Europe wants Greece to make spending cuts in order to secure a deal that will unlock €7.2 billion in bailout funds and prevent Athens defaulting on its debts when its bailout expires at the end of the month.

A default by Greece could lead to the country’s exit from the euro zone.

But Greek Prime Minister Alexis Tsipras stuck to a hard line on Wednesday, reiterating that further cuts cannot be made.

The Greek central bank warned Wednesday that the country could be plunged into an “uncontrollable crisis”, unless a deal is agreed soon.

European finance ministers were to hold talks in Brussels later Thursday, but expectations for a deal were not high.

Investing.com