So what happened to the US dollar?
The Dollar fell against most major currencies last night, after the Federal Reserve surprised the markets by announcing no reduction to its economic stimulus program – no tapering!
The US dollar dropped to a seven-month low against the Euro and its lowest level this month against the Yen. It fell against the Pound to its weakest since Jan. 13, and a nearly three-month nadir versus the Australian dollar. Emerging-market currencies surged against the greenback, with the Brazilian real, Indian rupee and South African rand each rallying by more than 2%.
The Dollar dropped sharply immediately after the Fed said that it wanted to see more evidence of sustained improvement in the economy before it scaled back its bond-buying program. During Fed Chairman Ben Bernanke’s press conference following the announcement, the dollar continued to weaken as he sounded an even more dovish note when he appeared to signal a less-hasty rush to taper bond-buying in the near term.
After the announcement the Pound was trading at $1.6149 against the Dollar, compared with $1.5901 late Tuesday.