The dollar fell broadly on Thursday after the U.S. Federal Reserve maintained its interest rate cut projections for the year in the face of upside surprises on inflation, and did not strike a more hawkish tone as some investors had feared.
The Australian dollar jumped after data on Thursday showed employment rebounded sharply in February and the jobless rate dived far below forecasts, pointing to a still-tight labour market there.
The Aussie was last 0.33% higher at $0.6608, after having risen more than 0.4% to a one-week top of $0.6615 in the wake of the strong jobs data.
At the conclusion of the Fed's policy meeting on Wednesday, Chair Jerome Powell said recent high inflation rate readings had not changed the underlying "story" of slowly easing price pressures in the U.S. as the central bank stayed on track for three rate cuts this year, even though it projected slightly slower progress on inflation.
That knocked the greenback lower as traders were quick to rebuild bets of a Fed easing cycle beginning in June, with markets now pricing in a 75% chance of a rate cut that month, as compared to 59% chance a day ago, according to the CME FedWatch tool.
The euro and sterling were among major currencies that notched one-week highs against the dollar on Thursday, rising to $1.09375 and $1.2798 respectively.
The dollar index was flat at 103.23, after having slid more than 0.5% in the previous trading session.
The yen rose 0.4% to 150.63 a dollar, after having slumped to a four-month trough of 151.82 in the previous session and toward a multi-decade low.
Despite the Bank of Japan's (BOJ) landmark shift away from negative interest rates earlier in the week, policymakers signalled that "accommodative financial conditions" were expected to be maintained for some time.
That gave investors confidence to rebuild positions in the popular yen carry trade as stark interest rate differentials between Japan and the U.S. were likely to stay for some time, which in turn sent the currency sliding.
Source : Bloomberg
