Dollar retains gains against euro, yen

The dollar steadied against the euro and yen today to hold onto gains made the previous session.

The dollar steadied against the euro and yen today to hold onto gains made the previous session.

The gains came on views that the Federal Reserve may keep interest rates on hold for some time. The Fed left the funds rate unchanged at 5.25 per cent on Wednesday but eliminated a reference to possible further rate rises in its post-meeting statement.

Investors at first took the shift as a sign that a rate cut may be near, selling the dollar against major currencies and pushing the US currency to a two-year low against the euro.

But they soon started to consider that the Fed might not be in hurry to cut rates and that the dollar might be oversold, as the US central bank also reiterated that inflation was still its main concern.

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The euro was little changed against the dollar around $1.3330. The single currency had climbed to $1.3412 in the previous session, the highest since March 2005, as investors bet the European Central Bank will further boost interest rates this year from the current 3.75 per cent.

Against the yen, the euro also held steady at 157.50 yen.

The dollar was also little changed at 118.15 yen. The dollar rose 0.4 per cent against the yen in the previous session.