Investing.com - The dollar shot up against most major currencies on Wednesday after the Federal Reserve cut its monthly bond-buying program to $55 billion from $65 billion, while comments from Janet Yellen suggesting a possible timetable as to when rates may rise spooked markets and sent investors chasing safe-haven greenback positions.
Fed bond purchases spur recovery by suppressing interest rates, weakening the dollar in the process.
In U.S. trading on Wednesday, EUR/USD was down 0.75% at 1.3829.
The Fed earlier said it was leaving interest rates unchanged and reduced the amount of bonds it buys in the open market each month to $55 billion from $65 billion, both moves in line with expectations.
The news sent the greenback rising, as the Fed''s asset-purchasing program, which kicked off in 2012 at $85 billion a month, has suppressed long-term interest rates for over a year, sending investors to assets like stocks with the hope investing and hiring ensues.
Elsewhere, the Fed omitted previous language calling for rate hikes if the unemployment rate approaches a 6.5% threshold, a policy tool known as forward guidance.
Even though the economy is improving, a highly accommodative monetary policy stance remains appropriate, the U.S. central bank said.
The dollar shot up, however, after Fed Chair Janet Yellen suggested at a press conference that interest rates could rise six months after the bond-buying program ends, which sparked a selloff in equities markets and fueled demand for the dollar.
The dollar was down against the yen, with USD/JPY up 1.08% at 102.53, and up against the Swiss franc, with USD/CHF up 0.86% at 0.8806.
The greenback was up against the pound, with GBP/USD down 0.30% at 1.6542.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.99% at 1.1246, AUD/USD down 0.92% at 0.9040 and NZD/USD down 0.73% at 0.8557.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.76% at 80.12.
On Thursday, the U.S. is to publish the weekly report on initial jobless claims, as well as data on existing home sales and manufacturing activity in the Philadelphia region.
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