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FX round-up: Dollar weakens after hold decision

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Date: Thursday 26 Jun 2008

LONDON (ShareCast) - The dollar fell against the euro and the yen after the Federal Reserve, as widely expected, kept interest rates unchanged at 2%.

Wednesday’s decision to keep interest rates on hold comes after the Fed’s seven consecutive cuts since last September.

In the accompanying statement the Fed said, "although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased."

The greenback had received a boost earlier in the session after a report showed orders for durable goods were unchanged in May, against expectations for another decline.

The euro strengthened after European Central Bank President Jean-Claude Trichet suggested that euro-zone interest rates are still on track for an increase in July.

Sterling remained steady after a stronger than expected data soothed concern about the slowing UK economy.

The Confederation of British Industry's distributive trades balance rose to -9 in June, against average forecasts of -17. The report supports last week’s strong figures for retail sales in May.

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