Forex - Dollar Gains Inb Asia On Fed, BoJ Steady As Expected

The dollar gained in Asia on Thursday in Asia as the Fed took the expected move of paring back its balance sheet and kept its outlook for rate hikes.

USD/JPY changed hands at 112.41, up 0.16%, while AUD/USD traded at 0.8001, down 0.37%. NZD/USD fell 0.41% to 0.7327.

The Bank of Japan held policy steady as expected after the consluion of it two-day meeting on Thursday, with an asset buying program focused on the yield curve at Y80 trillion annually.

The board voted 8 to 1 to keep the yield curve policy in place and the bank raised its estimates of public investment wile the vote in asset buying was unanimous.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.12% to 92.33.

Earlier, New Zealand reported second quarter GDP bang-on with expectations, up 0.8% on month and a 2.5% annual rise.

The Federal Reserve said it would start to unwind $4.5 trillion in financial crisis-era support starting in October and stuck to its forecast to raise interest rates again this year, saying hurricane damage won’t derail an otherwise healthy expansion.

“Hurricanes Harvey, Irma and Maria have devastated many communities, inflicting severe hardship,” the Federal Open Market Committee said in its statement on Wednesday following a two-day meeting in Washington.

“Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.”

As expected, policy makers left the benchmark interest rate unchanged in a range of 1 percent to 1.25 percent.

“We continue to expect that the ongoing strength of the economy will warrant gradual increases in that rate to sustain a healthy labor market and stabilize inflation around our 2 percent longer-run objective,” Chair Janet Yellen said during a press conference.

Earlier, the dollar came under pressure after sales of previously owned homes in the US unexpectedly fell in August, as tight supply continued to weigh on housing activity.

Existing home sales declined 1.7% in August from the previous month to an annualised pace of 5.35m homes, the National Association of Realtors, said on Wednesday. Economists were expecting a 0.3% rise to 5.46m homes.