17.03.202121:14:00UTC+00Dollar Loses Ground After Fed's Comments On Interest Rates

After staying above the flat line in the Asian and European session, the U.S. dollar slipped on Wednesday after the Federal Reserve left rates unchanged and said it expects to keep rates at near-zero levels through 2023.

The central bank also reiterated it plans to continue purchasing bonds at a rate of at least $120 billion per month until "substantial further progress" has been made toward its policy goals.

The Fed said members now expect U.S. GDP to soar by 6.5% in 2021 compared to the 4.2% spike forecast last December. The central bank revised upward its inflation forecast to 2.2% from 1.8%.

In its accompanying statement, the central bank acknowledged that indicators of economic activity and employment have turned up recently.

A report from the Commerce Department showed a substantial decrease in new residential construction in the U.S. in the month of February, with housing starts extending the sharp pullback seen in the previous month.

The report said housing starts plummeted by 10.3% to an annual rate of 1.421 million in February after slumping by 5.1% to a revised rate of 1.584 million in January. Economists had expected housing starts to decrease by 0.9% to a rate of 1.565 million from the 1.580 million originally reported for the previous month.

The dollar index, which advanced to 92.00 by early afternoon, dropped to a low of 91.38 later in the day, and was last seen at 91.41, down 0.5% from previous close.

Against the Euro, the dollar weakened to $1.1987, sliding nearly 0.7%.

The Pound Sterling was stronger, fetching $1.3970 a unit, more than 0.5% up from Tuesday's close of $1.3894.

The Yen firmed up to 108.84 a dollar, gaining from 109.32 it touched around noon.

The dollar slid to 0.7800 against the Aussie, losing about 0.7%. Against Swiss franc, the dollar was weaker, fetching CHF 0.9222 a unit, about 0.25% less than on Tuesday.

The Loonie firmed up to 1.2402 a dollar from 1.2448 despite lower crude oil prices. Data released by Statistics Canada showed annual inflation rate in Canada rose to 1.1% in February, from 1% in January. Although it was the steepest inflation rate in a year, it was below market expectations of 1.3%. Month on month, the consumer price index rose 0.5% in February.

Core consumer prices in Canada increased 1.2% in February of 2021 over the same month in the previous year.

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