The US Federal Reserve pledged to support growth by keeping interest rates close to zero for at least until late-2014, sending the US dollar tumbling to 2012 lows against a number of its main trading partners. The dollar’s decline helped overshadow extremely disappointing growth data from the UK which should otherwise keep the British pound under pressure for the foreseeable future. The euro was the most obvious beneficiary from the dollar’s demise, rising to a five-week peak despite unresolved debt talks in Greece which are becoming more and more desperate. The Reserve Bank of New Zealand kept its benchmark interest rate at 2.5 per cent and also indicated that it may too support accommodative policy for longer than expected. Nonetheless, the so-called “Kiwi dollar” powered higher alongside its Australian counterpart as investors dumped the US dollar in favour of risky bets.

Sterling

Sterling came under further pressure after the broadest measure of the economy’s health fell more than expected, and the minutes to the Bank of England’s January meeting were seen keeping the monetary policy committee on course to ease policy in the months ahead. The pound somehow managed to reach a three-week high against the US dollar, thanks largely to the US Federal Reserve’s promise to keep interest rates near-zero for longer than expected.

US dollar

The US dollar tumbled across the board following the US Federal Reserve’s extraordinary decision to publish individual forecasts on where policymakers see interest rates over the next few years. The greenback fell to almost two-month lows against the Swiss franc and to a five-week trough versus the euro.

Euro

Stalemate in Greece over negotiations to write-off some of Athens’ enormous debt commitments continue to be a major drag on the single currency. However, a better than expected report on German business morale and the US Federal Reserve policy announcement helped boost risk appetite and the euro to a five-week high against the US dollar.

Japanese yen

The Japanese yen opens at one-month lows against the British pound after the US Federal Reserve’s pledge to keep borrowing costs ultra-low for an extended period helped boost appetite for risk. The yen may face added pressure over the next 24-hours with data on inflation and retail sales expected to show the Japanese economy still at risk of another downturn.

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